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Hypnion Sleeps Easier With $47.5M

Drug developer Hypnion has raised $47.5 million in an effort to bring new sleep-disorder drugs to clinical trials within the next year.

“The big pharmaceutical companies have shifted over the last few years from doing partnership deals with biotech companies that have promising technology platforms to doing partnerships with biotech firms that have produced a product that they can sell,” says Nicholas Galakatos, a general partner with MPM Capital, who now sits on Hypnion’s board of directors. “We’re very sensitive to this trend, and we feel that Hypnion is a great investment because it’s just now in the midst of evolving from a technology company to a company with a great product.”

MPM led the deal, contributing a little more than the $6 million contributed by its co-lead, Forward Ventures. Galakatos would not disclose the exact amount of MPM Capital’s investment.

Advanced Technology Ventures, S.R. One Limited, JAFCO and Coastview Capital also participated in teh round, as well as Oxford Bioscience Partners, Flagship Ventures and GIMV, who all returned after investing in the company’s $10.4 million Series A round in September 2000.

Sleep-disorder drugs are used to treat people with diseases such as insomnia or sleep apnea, as well as business travelers who contend with jet lag or workers battling fatigue as a result of working graveyard shifts on a regular basis. Hypnion estimates that over 50 million people in the United States suffer from sleep disorders and that the market could be worth up to $10 billion.

Using technology called Score 2000, a platform developed at Stanford University by Dr. Dale Edgar, who is now the company’s chief science and technology officer, Hypnion believes it has found a way to manipulate sleepiness in a new way. It’s developing compounds intended to affect different receptors in the nervous system to avoid the potential for addiction and other pitfalls that have plagued its predecessors.

“The drugs have already worked on animals,” says Galakatos. “The next step will be to test them on humans. That is the excitement of this investment, but it’s also the risk.”

Although the company has no definite plans for raising capital in the future, Galakatos claims that this funding is intended to finance Hypnion to a point where it can demonstrate the efficacy of its compounds on humans.

Martin speculates that at that point Hypnion will either establish a partnership with a pharmaceutical company, or it will resolve to take its product to market on its own. In the latter scenario, he believes the company could begin generating revenue in 2010.

Hypnion also added Jean George, a partner with Advanced Technology Ventures; Joel Martin, a partner with Forward Ventures; and Edward Scolnick, a former president with Merck Research Laboratories; to its board.