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A Montreal biotechnology company trying to resuscitate a class of weight-loss drugs with a troubled past has raised $95-million from investors to take its lead molecule into human trials to see if it works as intended.

Inversago Pharma Inc. drew the funding from lead investor New Enterprise Associates, one of the most established American financiers in life sciences, as well as another new investor, Amgen Ventures. It also received funding from past backers Forbion – a Dutch venture-capital company – Canadian investors Fonds de solidarité FTQ, Genesys Capital and AmorChem LP and the Juvenile Diabetes Research Foundation’s JDRF T1D venture-capital fund.

Inversago is developing a drug known as a CB1 blocker, 14 years after some of the biggest names in pharmaceuticals abandoned their efforts to do the same. Those drugs, by AstraZeneca PLC and Merck & Co. and others, worked but also had harmful side effects including psychiatric disorders, causing regulators to reject them.

But the Montreal company’s molecule avoids the problems of earlier CB1 drugs, which bond to cannabinoid type 1 receptors throughout the body. The earlier drugs caused problems when they entered the brain. So George Kunos, a researcher with the U.S. National Institutes of Health, designed a molecule built on the earlier work that wouldn’t enter the brain but still block other CB1 receptors in the body.

That meant it could still have the desired impact but not cause the troubling side effects such as severe anxiety and depression. Inversago obtained a global licence to that intellectual property to develop its drug.

Inversago’s lead drug, known as INV-202, is a treatment for diabetic kidney disease. It recently completed a second human safety trial on 40 patients but hasn’t published the results yet. However, results from its first safety trial concluded in January and other preclinical work were enough to secure clearance from the U.S. Food and Drug Administration to perform human efficacy trials.

The company will test the drug on 240 patients with diabetic kidney disease, who are obese, diabetic and typically have liver ailments, to see if it helps them lose weight. That trial will be conducted at 80 sites in North America, Britain, Eastern Europe and Israel. It is set to start this year, with results expected in 2024.

“Right now, the data is fairly compelling,” said Edward Mathers, a general partner with NEA based in Chevy Chase, Md. “But it’s still early. From the data we have seen it does not seem to be crossing into the central nervous system and causing side effects that led to issues” for the previous class of CB1 blockers.

If the results from the efficacy trial are successful, the company will probably either raise a large private capital financing or, if the market for biotech stocks bounces back from multiyear lows, go public or possibly sell out in 2024, said Inversago CEO François Ravenelle in an interview.

“This is biology that eventually needs to be commercialized by a big pharma,” he said. “I think there will be a lot of tension to get us off the table. We already feel it, but what is the value and price that they’re willing to pay for this?” He said his preference was “to develop this and create as much value as possible to allow us to grow on the public market.”

Mr. Mathers said if the efficacy data “gets to be as compelling as we hope it will be, we think Big Pharma will be interested in trying to tie up some sort of relationship. All of a sudden the interest in CB1 [blockers] will increase exponentially for sure.”

Inversago is developing other CB1-blocking drugs for other metabolic conditions including diabetic nephropathy, type 1 and type 2 diabetes and a liver ailment called non-alcoholic steatohepatitis. The company previously raised $35-million in 2020 and $7-million two years before that.