Washington Editor

The public markets still have legs, although maybe shorter than desired.

CombinatoRx Inc. raised $42 million through its initial public offering, though the deal came in lower than first desired. For the Boston biopharmaceutical company, that doesn't matter much - almost a year after first filing, it got the deal done.

"We're absolutely delighted, and we think the markets are good," said Robert Forrester, its executive vice president and chief financial officer. "We're delighted with the reception we received on the road, and we're delighted with the support we got from the investors."

CombinatoRx, which is building a pipeline based on new medicines combinations of approved drugs, sold 6 million common shares at $7 apiece, at the low end of its $7 to $9 range. That's below a previously projected range of $10 to $12.

"I think this just reflects the reality of the market," Forrester told BioWorld Today. "The market is, and continues to be, very price sensitive."

On its first day of trading, the stock (NASDAQ:CRXX) gained 85 cents to close at $7.85.

The funds will be applied to furthering its pipeline, which includes seven products that have reached Phase IIa.

"[The new funds are] very helpful," Forrester said, "and obviously we're going to continue with the development of our seven products that are in the clinic. So the ongoing development of those products is at the forefront of our use of proceeds, together with bringing additional products into the clinic over the next few years to fully reload the pipeline."

That portfolio boasts six immuno-inflammatory products, including CRx-102, a selective steroid amplifier (SSA) made of prednisolone and dipyridamole; CRx-139, an SSA consisting of prednisolone and an undisclosed selective serotonin reuptake inhibitor; CRx-119, which combines prednisolone with amoxapine; and CRx-170, another SSA made of two undisclosed drugs. Additional product candidates include CRx-140, a calcineurin inhibitor that combines cyclosporine together with an undisclosed enhancer agent, and CRx-150, a cytokine modulator pairing two undisclosed drugs. For cancer, the company is developing a dual-action drug, CRx-026, which is made of chlorpromazine and pentamidine

CombinatoRx has been partnering lately, first out-licensing some Asian development and commercialization rights to CRx-026, specific to China, South Korea and Taiwan. The agreement, made with HenKan Pharmaceutical Co. in Taiwan, could earn at least $23.5 million for CombinatoRx. (See BioWorld Today, July 19, 2005.)

Its more recent deal has a higher potential, in excess of $500 million. That arrangement was reached last month with Angiotech Pharmaceuticals Inc., of Vancouver, British Columbia, and focuses on creating new products built from drug combinations. (See BioWorld Today, Oct. 5, 2005.)

The company first registered for the IPO 11 months ago. (See BioWorld Today, Dec. 14, 2004.)

All the stock was offered by CombinatoRx, which also granted the deal's underwriters a 900,000-share overallotment option. SG Cowen & Co. LLC in New York is acting as the IPO's sole book-running manager, with San Francisco-based Pacific Growth Equities LLC its co-lead manager. Co-managers include Lazard Capital Markets, of New York, and A.G. Edwards, of St. Louis.

Molecular Insight Registers IPO

Molecular Insight Pharmaceuticals Inc., of Cambridge, Mass., filed for an estimated $57.5 million offering.

Though executives at the company declined to comment, its SEC filing spells out eventual plans for using net proceeds: continuing to develop its lead molecular imaging pharmaceutical candidate, Zemiva, and prepare for its commercialization; beginning clinical development of Ultratrace MIBG, its lead targeted radiotherapeutic candidate for cancer; and for other working capital and general corporate activities.

Zemiva (iodofiltic acid I 123) is a radiolabeled fatty acid analogue being developed as a molecular imaging diagnostic product for cardiac ischemia. The company expects that the product will improve diagnosis and disease management in a more cost-effective and expeditious manner than current standards of care in both the emergency department and non-acute settings such as scheduled cardiac stress tests, and it plans to tap both markets. Eventually, Molecular Insight plans to develop an internal sales and marketing team to market Zemiva in the U.S., pending regulatory approval, and establish collaborations to market it abroad.

Initial findings from a recently completed Phase IIb trial suggested that Zemiva can detect areas of cardiac ischemia with results generally consistent with the current standard of care, and its predictive value was effective at ruling out cases in which cardiac ischemia was not present. Molecular Insight plans to advance Zemiva into a Phase III trial in the first half of next year.

In addition to Zemiva, the company is developing a portfolio of products for cardiovascular molecular imaging, as well as for oncological molecular imaging and targeted radiotherapy. In that latter category falls Ultratrace MIBG, a targeted radiotherapeutic candidate for cancer that Molecular Insight said could improve the diagnosis, treatment and monitoring of neuroendocrine tumors such as neuroblastoma, pheochromocytoma and carcinoid. The company expects to enter clinical studies in the first half of next year. Its earlier-stage preclinical candidates address prostate cancer, tumor angiogenesis and heart failure.

Founded in 1997 as Imaging Biopharmaceuticals Inc., the company changed its name to Biostream Inc. in 1998 and later to Molecular Insight Pharmaceuticals in 2003. It has incurred a cumulative net loss of $46.2 million from its inception through June 30, at which time it had about $21.2 million in cash and cash equivalents.

Chairman and CEO David Barlow holds 13.8 percent of the company's shares, while one of its founders, John Babich, its president and chief scientific officer, has 3.1 percent. Other major shareholders include Stephen Feinberg, who has 13.7 percent, including shares and stock issuable upon exercise of warrants held by Cerberus Partners LP.

James Poitras has 6.6 percent, and Ann Barlow owns 6.2 percent.

The IPO's underwriters include Piper Jaffray & Co., of New York; Oppenheimer & Co. Inc., also of New York; Roth Capital Partners LLC, of Newport Beach, Calif.; and SG Cowen & Co. LLC.