Pappas Capital Announces the Passing of…

Diabetes drug development company Lumena Pharmaceuticals aims to harness a benefit that diabetics receive from gastric bypass surgery and deliver it to those patients in the form of a pill.

The Durham, North Carolina-based company plans to start clinical trials on its experimental drug this year. To get there, Lumena has raised $500,000 in a round that could go up to $2 million with funding so far coming largely from Durham venture capital firm Pappas Ventures.

Clues to how Lumena’s technology works come from the company’s name. Lumena is a reference to lumen, the inside of the intestines, said CEO Michael Grey, a pharmaceutical industry veteran and a venture partner and scientific advisory board member at Pappas Ventures. Grey said that most gastric bypass surgery patients are type 2 diabetics. Studies have found that in 80 percent of those patients, blood glucose levels normalized within days. It’s not a function of weight loss; something else is happening, Grey said.

That something else is the diversion of bile. While bile is a means for the body to process fats, it also acts as a signaling agent. In normal gastrointestinal function, most of the bile is recirculated. But gastric bypass surgery also bypasses that mechanism, Grey said. The bile in the GI tract triggers receptors that release glucagon-like peptide 1, or GLP-1, a hormone that helps regulate blood sugar.

“What we set out to do is find a means to do this pharmacologically,” Grey said.

Lumena was founded in January. The technology, however,comes from a scientist who used to work at Amylin Pharmaceuticals (NASDAQ:AMLN), a San Diego, California biotechnology company that develops diabetes and obesity treatments. The scientist’s discovery came after he left the company and Grey said that Amylin has no claims on its technology. But one of the Lumena’s board members is Ted Greene, founder and former CEO of Amylin.

Grey said that Lumena’s drug could offer fewer side effects and potentially be safer than other diabetes treatments. Unlike other drugs that circulate through the bloodstream, Lumena’s treatment would work within the GI tract. It also does not introduce a chemical into the body, but rather stimulates the body’s natural GLP-1 production. The drug could be a medical breakthrough for diabetics. While there are drugs that work locally within the GI tract, there are currently no diabetes treatments that work this way.

“It’s really quite an innovative approach to treating diabetes and doing it through a means of a target located within the GI system,” Grey said.

The experimental drug has shown promising results in animal studies, preclinical work that started before the company was formed. Grey said Lumena’s goal is to start clinical trials on its diabetes drug candidate by the end of the year. In the first half of 2012, the company expects it would need to seek additional capital.