A New Haven-based biotechnology startup is on the frontlines of finding a new treatment for major depression and anxiety disorders.

In the early 2000’s, researchers at the School of Medicine discovered that small doses of ketamine – known colloquially as the party drug Special K — were effective in treating patients with severe depression and anxiety. This past year, researchers at the forefront of this discovery, including Psychiatry Professors Gerard Sanacora, John Krystal and Vladimir Coric, formed BioHaven Pharmaceutical Holding Company

in order to move forward with commercializing the drug.

The company received an initial $3.5 million investment from Portage Biotech Inc., a U.K.-based venture company, to advance product development in early January. The money will enable BioHaven to run large-scale clinical efficacy trials on the drug, with the eventual goal of placing it on the market by next year.

“It’s a completely different approach,” Sanacora, director of the Yale Depression Research Program, said. “It’s an all-purpose approach that’s physiologically-based across diagnostic categories.”

Rather than acting on the brain’s levels of serotonin, norepinephrine and dopamine — the neurotransmitters most often affected by antidepressant medications — ketamine regulates levels of a neurotransmitter called glutamate. Coric said this finding breaks with several decades of research on depression, which until recently was thought to be mainly affected by serotonin and dopamine levels in the brain.

The team first observed that a single dose of ketamine resulted in an anti-depressant effect within a couple of hours of administering the drug, a break from other anti-depressant medications which take several weeks on average to relieve symptoms of depression. However, ketamine, in its purest form, produced side-effects including distorted vision and hearing.

After these observations, the researchers worked to formulate a new drug that would regulate levels of glutamate, based on their work on ketamine and other glutamate-modulating agents.

“Those critical observations and studies at Yale were the genesis for the company,” Coric said. “It was so novel at the time that we worked with OCR to patent glutamate-regulating agents.”

Working with Yale’s Office of Cooperative Research (OCR), the researchers actively participated in the prosecution of the patent application Yale filed. They continued to build upon their initial observations, which was essential for licensing and commercialization.

OCR Senior Associate Director of Licensing David Lewin GRD ’96 said that it has taken nine years for the intellectual property and the project to reach a level of maturity where it could attract venture capital required to move into product development, a trend that is not uncommon within the biotech start-up community for therapeutic concepts.

“We set up an intellectual property strategy, which can take years to execute,” Lewin said. “The patents for this technology were issued just two months ago, and, while it usually doesn’t take this long, five years is not atypical.”

Krystal said the research unit received critical support from Connecticut’s Department of Mental Health and Addiction Services, as well as the National Institute of Mental Health and the Brain and Behavior Research Foundation.

“This is an example of how investment in medical research by the State of Connecticut not only pays off by identifying potential new medical advances that could ultimately alleviate suffering associated with mental disorders in Connecticut,” Krystal said. “But [it] also pays off economically for the State by bringing in research grants and by stimulating the creation of new biotechnology companies.”

Pfizer veteran employee and Portage CEO Declan Doogan, who serves as executive chairman of BioHaven, said that the startup’s drug could soon enter Phase II and Phase III trials, with the goal being characterizing the new drugs in two to three years.

“We have access to top talent and compounds with known safety profiles to be reformulated for the clinic,” Doogan said in a statement. “This will allow us to go into Phase II and Phase III trials. Our goal is to have these new drugs characterized in two to three years.”

In the Phase 1 trial, the researchers tested the new drug in a small group of people to ensure its safety, determine the appropriate level of dosage, and identify side effects. In Phase II, the drug will be given to larger group of people to test its effectiveness, and then, in Phase 3, the drug will be given to larger groups of people to confirm it works.

BioHaven will operate out of 234 Church St., but Portage Inc. is headquartered in the U.K.