Washington Editor

Antigenics Inc.'s CEO not only believes in the potential of his company and its product pipeline, but literally put his money where his mouth is this week by contributing $5.1 million of his own funds as part of a $26.1 million private placement in stock and warrants.

"This is not a trivial amount of money, so one doesn't do this for window-dressing purposes," said CEO Garo H. Armen.

In fact, Armen told BioWorld Today, since the firm's founding in 1994, he has put in excess of $10 million of his personal finances into New York-based Antigenics, which focuses on developing and commercializing vaccines and other products targeting cancer and infectious diseases.

The lead institutional investor for the remaining $21 million in the private placement is New York-based Invus Public Equities LP, with participation from Greenwich, Conn.-based Oracle Investment Management Inc. and other accredited investors.

Antigenics has agreed to sell about 8.7 million shares of its common stock priced at $3 per share, along with 10-year warrants to purchase an additional 8.7 million shares with an exercise price of $3 per share.

Armen said he was "particularly heartened" by the investors who participated in the private placement because of the "very substantial amount of due diligence" they pursued.

"They have a pretty good picture of what are the realities of the company," he said. "They did not just invest, but they invested based on substantial due diligence. That's very comforting because I'd much rather have investors who understand the company thoroughly and have a long-term vision of our potential than typically brokered deals where you get investors coming in and out of the stock at some frequency. I'm very happy with the composition of the investors we have."

Armen said he based his rationale for contributing a substantial amount of his own funds for the private placement on Antigenics' "potentially optimistic future."

"This is a time when a lot of the fruits of our efforts have matured now," he said.

Antigenics anticipates approval of its cancer vaccine Oncophage (vitespen) in patients with kidney cancer in Russia in the first half of this year, Armen noted. The firm also intends to file approval applications for the same indication later this year with the European Medicines Agency and Health Canada, he added.

Oncophage has been granted fast-track and orphan drug designations by the FDA for kidney cancer and metastatic melanoma.

Phase III data reported by Antigenics in May showed that patients administered Oncophage in the intermediate-risk population who were without disease at baseline had a 45 percent improvement of recurrence-free survival. In addition, there was a trend toward improved overall survival in that population, the study's secondary endpoint.

Armen noted that most prophylactic or therapeutic cancer agents do not target the intermediate-risk population.

"Our cancer vaccines, in general, are ideally suited for these patients," he contended.

Antigenics chose Russia as the first country to pursue approval of Oncophage because of the nation's current emphasis on health care and improving its citizens' quality of life, Armen explained.

Specifically, he noted, the Russian government recently has put a lot of effort into improving the quality of life for patients with cancer and has directed substantial funds to cover the costs of drugs to treat the disease. In fact, Armen said, the Russian government reimburses at higher rates for cancer agents than does the U.S.

Antigenics' investors, Armen said, also should be encouraged by future royalties the firm is due to receive through partnerships with London-based GlaxoSmithKline plc and other firms for QS-21, an investigational adjuvant added to vaccine and other immunotherapies that is designed to enhance the body's immune response to the antigen contained within the treatment.

Currently, Antigenics' QS-21 licensees are investigating 16 products for cancer and infectious diseases, "which are in the hands of our licensees, being fully funded by licensees, so we don't have any financing risk associated with those products at all," Armen said. "They're profitable for us, they'll continue to be profitable when the royalties kick in. There's a terrific ramp-up of royalty income and so it's a no-risk proposition for us. It's a luxury to have something like that for any biotech company, and that puts us in a very unique situation."

The first product using QS-21, Armen said, is likely to make it to market in the next two years.

"It's an annuity for us," he said. "All we have to do is wait and collect those royalties, and we have no risk or expense associated with it."

Antigenics' development pipeline also includes Aroplatin (L-NDDP), a liposomal, third-generation platinum chemotherapeutic, and AG-707, a therapeutic vaccine for the treatment of genital herpes, Armen noted.

Shares of Antigenics (NASDAQ:AGEN) rose 14 cents Wednesday, or 6.5 percent, to close at $2.29.