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Twelve years ago some of the biggest names in pharmaceuticals abandoned a class of weight-loss drugs they had thought would deliver blockbuster sales. The drugs worked – but also caused psychiatric disorders in many patients, and regulators rejected them.

Now a Montreal biotechnology startup called Inversago Pharma Inc. is attempting to resuscitate the market for so-called CB1 blockers by developing a treatment it hopes will successfully treat a range of obesity-causing conditions, including diabetes, without the severe side effects of the early drugs.

The key, according to François Ravenelle, the company’s chief executive, is to avoid the drug entering the brain, where the side effects occur. “Everyone recognizes the value and therapeutic potential of blocking the CB1 receptors outside the brain,” he said. “But nobody has come up with the right molecule to be able to drive efficacy without causing the [original] problems.”

On Tuesday, Inversago will announce it has raised US$35-million led by Dutch venture capital firm Forbion and backed by Canadian investors including Fonds de solidarité FTQ, Genesys Capital, AmorChem LP and the Juvenile Diabetes Research Foundation’s JDRF T1D venture capital fund.

Inversago will use the proceeds to take its lead drug – aimed at treating a rare obesity-causing disorder in children called Prader-Willi syndrome – into human trials in the coming weeks. The first trial will see the company test its drug on about 70 to 80 healthy people to ensure it is safe, with results expected by mid-2021.

Several pharmaceutical giants including Sanofi SA, Pfizer Inc., AstraZeneca PLC and Merck & Co. Inc. worked to bring CB1 blockers to market earlier this century to address a growing global obesity epidemic. The drugs bonded to CB1 (or cannabinoid type 1) receptors along the central nervous system, activating responses including appetite suppression and increasing metabolism and energy expenditure.

Regulators took issue with side effects caused when the drug entered the brain, including severe anxiety and depression. But researchers continued to seek out therapies that wouldn’t affect the brain. George Kunos, a researcher with the U.S. National Institutes of Health, designed a molecule built on earlier work that successfully blocked other CB1 receptors throughout the body – without entering the brain. That meant it could still have the desired impact but not cause the troubling side effects, improving on the earlier treatments. Inversago obtained a worldwide licence to that intellectual property to develop its drug. Another company, Massachusetts-based Corbus Pharmaceuticals Holdings Inc., is taking a similar approach with a rival drug candidate.

“What’s become clear about this mechanism is the molecules didn’t have to go into the brain to create weight loss and improved metabolic function,” said Jamie Stiff, managing director with Genesys, which helped create Inversago. “As long as [the molecules] didn’t get into the brain, all the side effects we saw in the first generation of compounds went away.”

The company is targeting Prader-Willi for two main reasons. To go after the whole obesity market would require vast amounts of testing, which would take years and cost a lot; the team discovered early on there was limited investor appetite for that. By focusing on a rare disease (it affects about one in every 15,000 North Americans) with no known cure, the company can get a drug to market a lot more quickly and less expensively under the U.S. Food and Drug Administration’s expedited approval process for such treatments.

If Inversago can show its drug is effective and safe, that will “absolutely” give the company huge potential to develop treatments for other obesity-related ailments, Mr. Ravenelle said. He added the company could go public in fall, 2021, or spring, 2022, if the results from the safety trial are positive.

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