Washington Editor

With its sights set on pushing two cancer candidates through the pipeline, GTx Inc. is looking to a $47.5 million public offering to fund Phase III development of Ostarine and Phase II trials for Capesaris.

The Memphis, Tenn.-based biotech is selling 10 million shares at $4.75 per share in the offering that's expected to close about June 28 and is granting Citigroup Global Markets Inc. and Jefferies & Co. Inc., the joint book-running managers and underwriters, a 30-day option on up to 1.5 million additional shares.

The company had 51.7 million shares outstanding as of March 31. Shares of GTx (NASDAQ:GTXI) were down 60 cents, or 11.5 percent, closing at $4.63 Thursday.

The offering follows recent meetings the company had with the FDA to discuss Phase III plans for Ostarine, an oral selective androgen receptor modulator, McDavid Stilwell, GTx's corporate communications director, told BioWorld Today.

The company had anticipated conducting two consecutive 12-month trials in cancer cachexia, which would have pushed filing into 2015. Instead, the FDA agreed to two five-month studies, with a more specific indication – prevention and treatment of muscle-wasting in non-small-cell lung cancer. No therapies have been approved for that indication, Stilwell said.

Because of the shorter duration, GTx can run the POWER1 and 2 trials concurrently. With shorter trials focusing on a more relevant indication, GTx decided "'we need to execute this plan,'" Stilwell said. Thus, the public offering.

Proceeds from the offering should be enough to get GTx through the first half of 2013. That will take Ostarine through Phase III and should fund two Phase II trials for Capesaris, which is being developed as an oral first-line treatment for advanced prostate cancer.

The placebo-controlled, double-blind Ostarine trials will begin next month, with the last patient visit occurring late next year.

A Phase IIb maintenance trial comparing an oral solution of Capesaris, a selective estrogen receptor alpha agonist, with Lupron Depot (leuprolide acetate, Abbott) is under way. GTx also is planning to start a Phase II dose study of a pill formulation of Capesaris.

Unlike current first-line prostate treatments, Capesaris doesn't appear to cause an estrogen deficiency, Stilwell said. He expects Capesaris to generate a lot of partnering interest once the data are in on the Phase II trials.

Earlier this year, GTx abandoned another prostate cancer candidate, toremifene, which was being developed in collaboration with Ipsen Group SA under a special protocol assessment (SPA). (See BioWorld Today, Sept. 6, 2006, and March 3, 2011.)

The companies terminated the collaboration after GTx received a complete response letter from the FDA requesting new data that would have required additional trials.

Subsequently, GTx reduced its work force by 15 percent this month. Those cuts involved staff involved in the toremifene development and commercialization, Stilwell said. (See BioWorld Today, Nov. 3, 2009.)

GTx still markets a 60-mg version of toremifene (Fareston) as a treatment for metastatic breast cancer in postmenopausal women with estrogen-receptor positive or unknown tumors, an indication that was approved in 1998. Fareston produced $1.2 million in net revenue in the first quarter.

Meanwhile, the company is waiting for its first big hit. As of March 31, it had an accumulated deficit of $355.5 million, and its net loss for the first quarter was $2.6 million, according to its prospectus.

"We expect to incur significant net losses in 2011 and for the foreseeable future as we continue our clinical development and research and development activities," the company said.

In other financing news:

• Cleveland BioLabs Inc., of Buffalo, N.Y., closed a $23.5 million registered offering of 5.87 million shares and 2.94 million warrants, enabling it to accelerate the development of CBLB502 to mitigate the effects of radiation. The firm sold the units at $4 apiece, with each unit consisting of one share of common stock and two warrants to purchase one-quarter of an additional share. Rodman & Renshaw LLC served as the placement agent for the deal. Shares (NASDAQ:CBLI) closed at $3.49 Thursday, up 13 cents.

• Rexahn Pharmaceuticals Inc. (NYSE:RNN), of Rockville, Md., filed a registration with the SEC to sell, from time to time, up to $100 million of common stock, preferred stock, warrants, debt securities or units.