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Active Biotech Adds Investor, Boosts Cash Balance by $42.6M

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By Jennifer Boggs
Managing Editor

Swedish firm Active Biotech AB nearly doubled its cash position and brought on board a new investor in a SEK270 million (US$42.6 million) fundraising this week.

The company's board agreed to issue 6 million shares to Investor AB, an investment firm spun out of the Wallenberg-owned Enskilda Bank in Sweden, a move that will broaden the shareholder base, which includes the large shareholders MGA Holding AB, Nordstjernan AB and East Bay AB.

As of Dec. 31, Active Biotech had about SEK216.7 million in cash, with another SEK81 .6 million recorded in early January in milestones from partner Ipsen SA related to development of prostate cancer drug tasquinimod. Proceeds from the latest fundraising will be used to support the biotech's partnered and proprietary programs, as well as position it for further partnering discussions.

Already locked into collaborations are late-stage compounds tasquinimod, which has completed enrollment in a 1,245-patient Phase III study and started Phase II trials in prostate cancer and other solid cancers, and laquinimod, a multiple sclerosis (MS) candidate partnered with Jerusalem-based Teva Pharmaceutical Industries Ltd., which is under review in Europe and wrapping up Phase III testing in the U.S.

The tasquinimod, or TASQ, deal dates back to 2011, for which Paris-based Ipsen paid $35.6 million up front, with another potential $249.4 million in milestones for rights to the anti-angiogenic drug outside North and South America and Japan. Active Biotech has been working with Teva since a $92 million deal in 2004 for laquinimod, which entered a third pivotal study earlier this week in 1,800 patients with relapsing-remitting MS. (See BioWorld Today, June 16, 2004, and April, 20, 2011.)

Among its unattached programs is Anyara, a tumor-targeting superantigen comprising a modified version of Staphylococcal enterotoxin A fused to the Fab portion of a monoclonal antibody that recognizes the 5T4 antigen, which is highly expressed in renal cell cancers. Earlier this year, a Phase II/III study testing the immunotherapy returned mixed results, sending shares of Active Biotech falling nearly 13 percent. (See BioWorld Today, Jan. 29, 2013.)

The study missed its primary endpoint, but the company pointed to a subgroup analysis – patients who had low or normal levels of antibodies to the antigen, plus low levels of interleukin-6 – that met statistical significance, both for overall survival and for progression-free survival. That subgroup represented roughly a quarter of the patients recruited in the trial, and Active Biotech has said Anyara might prove appropriate for 40 percent to 50 percent of patients in the North American and Western European markets.

Earlier in its pipeline, the Lund, Sweden-based firm has 57-57, an oral immunomodulator that has completed an exploratory study in systemic sclerosis/scleroderma, a rare autoimmune disease. That drug has orphan status in Europe.

Active Biotech also has ISI (inhibition of S100 interactions), a preclinical program stemming from the mode of action of quinoline compounds. A publication in a 2009 issue of PLoS Biology showed that quinoline compounds bind to a molecule dubbed S10049, which is found in white blood cells involved in regulating immune responses and is known to interact with pro-inflammatory receptors Toll-like receptor 4 and RAGE (receptor of advanced glycation end products).

The company currently is building up a patent portfolio for ISI, with plans to select the first candidate in 2014.

President and CEO Tomas Leanderson said the firm's "focus over the next 18-month period will be on finding suitable partners and partnering structures for each project," adding that a strong balance sheet is a "prerequisite in order to succeed with this activity in an optimal way."

The firm could not be reached for additional comment.

Shares of Active Biotech (STOCKHOLM:ACTI), which jumped 5.4 percent when the news was disclosed Wednesday, gained another 8.8 percent Thursday to close at SEK58.75, up SEK4.57.

Following the new issue, the company has about 74.9 million shares outstanding.

In other financings news:

• BioTime Inc., of Alameda, Calif., said it has amended its $5 million stock and warrant purchase agreement with Romulus Films Ltd., a UK-based investment company, originally signed on Jan. 4. Through the amendment, the companies have agreed to accelerate the closing date for the $3 million second tranche of the financing. The first $2 million tranche under the agreement was funded in January. The second tranche was originally intended to close later this year in conjunction with the closing of the acquisition of certain stem cell assets by BioTime's subsidiary BioTime Acquisition Corp. (BAC), which relate to an asset contribution agreement between BioTime, BAC, and Geron Corp. The remaining investment will now be made on April 10. Romulus has also committed to invest $5 million in BAC in conjunction with the consummation of the stem cell asset acquisition, which is expected to occur later this year. Since Romulus and BioTime signed their agreement, a 24,000 sq. ft. research facility has been leased for use by BAC, and it has also acquired equipment for its research facility, recruited senior research and product development management personnel, and worked to establish relationships with academic institutions and potential commercial development partners.

• DelMar Pharmaceuticals Inc., of Vancouver, British Columbia said it completed a $10.5 million private placement of units consisting of one share of common stock and one common stock purchase warrant. The offering consisted of 9.34 million units for gross proceeds of $7.5 million and a fully exercised overallotment option of 3.75 million units for additional gross proceeds of $3 million.

• Inovio Pharmaceuticals Inc., of Blue Bell, Pa., said it priced an underwritten offering of 27,377,266 shares of its common stock and warrants to purchase up to 13,688,633 shares of common stock at a combined price of $0.55 per share and related warrant for gross proceeds of $15.1 million. The warrants are exercisable at an exercise price of $0.7936 per share.

• Oculus Innovative Sciences Inc., of Petaluma, Calif., said it priced an underwritten public offering of 7,500,000 shares of its common stock at $0.40 per share with gross proceeds expected to be approximately $3 million before deducting the underwriting discount and other estimated offering expenses. The company has also granted the underwriters a 45-day option to purchase up to an aggregate of 1.125 million additional shares of its common stock to cover overallotments, if any. The offering is expected to close on or about March 12. The company plans to use the net proceeds from the offering for the repayment of debt and for general corporate purposes.

• PTC Therapeutics Inc., of South Plainfield, N.J., completed a $60 million financing led by Brookside Capital Partners Fund L.P. With new investors Adage Capital Management, Jennison Associates LLC, Longwood Fund, and some institutional investors. Credit Suisse First Boston, HBM Healthcare Investments Ltd., Vulcan Capital, Celgene, Delphi Ventures, Novo A/S and the Column Group also participated. Proceeds will support development of ataluren for Duchenne's muscular dystrophy and cystic fibrosis. The company has begun a Phase III confirmatory trial and hopes to begin enrollment in the first half of 2013.

• RXi Pharmaceuticals Corp., of Westborough, Mass., said it has entered into definitive agreements to undertake a private placement of approximately 113 million shares of common stock at $0.145 per share, for gross proceeds of approximately $16.4 million. The transaction is expected to close on or around March 12. The financing was led by OPKO Health Inc., of Miami, and Frost Gamma Investments Trust. Other participants included existing investors Tang Capital Partners LP and RTW Investments LLC as well as new institutional and accredited investors.

• Sirona Biochem Corp., of Vancouver, British Columbia, said it has completed the sale of 14,245,000 units at $0.10 per unit for total proceeds of $1.43 million in the first tranche of its private placement. Each unit consists of one common share of the company and one transferable share purchase warrant, which entitles the holder to purchase one additional common share at any time for two years from the closing date of the private placement at $0.15 per warrant share.