Assistant Managing Editor

Five months after the discouraging public markets prompted Light Sciences Oncology Inc. to yank plans for an initial public offering, the Bellevue, Wash.-based firm bolstered its cash position with a $40.1 million Series C round to support ongoing trials with its Light Infusion Therapy (Litx).

That latest round is expected to fund the completion of two ongoing Phase III studies of Litx, a drug-device combo product designed to kill target tissues using light-emitting diodes that activate LS11 (talaporfin sodium). The company is "near completion" in a hepatocellular carcinoma study, with patient enrollment expected to conclude by the end of the year, said Robert Littauer, vice president and chief financial officer of Light Sciences.

That trial, which is being conducted under a special protocol assessment with the FDA, aims to assess the survival of patients treated with Litx vs. standard-of-care therapies. Pending positive results, Light Sciences anticipates filing a new drug application next year, Littauer said.

The second Phase III study, which also is being conducted under an SPA, is designed to enroll about 450 colorectal cancer patients whose diseases have metastasized to the liver. The trial will compare the Litx system plus standard chemotherapy to chemotherapy alone and will measure progression-free survival and overall survival as its endpoints.

"We expect to complete that study in 2009," Littauer said.

The company's existing cash plus funds from the Series C should "take us to the point of having data from the metastatic colorectal cancer study," he told BioWorld Today, and through a regulatory filing of Litx in hepatocellular carcinoma.

Light Sciences also has plans to initiate a Phase III study of Litx in glioblastoma in the second half of this year, and is gearing up to launch a Phase IIa study later this quarter in benign prostatic hyperplasia. Though BPH, also known as an enlarged prostate, is a noncancerous indication, the company believes the Litx therapy will be able to kill prostate tissue via apoptosis within localized areas of the prostate without producing inflammation.

"Light Infusion Therapy can be used in a number of indications," Littauer said. "Cancer is just one of them." He said the company is exploring Litx's use in other areas, such as cardiovascular disease and dermatology.

Littauer said the firm anticipates partnering its oncology programs, though it has not yet determined whether it also will seek partners for other indications.

Overall, the recent financing round provides Light Sciences with solid financial footing and allows the company the chance to consider several different strategic options down the road, including possibly seeking another IPO if the markets improve. The firm initially filed to go public in 2006, hoping, at the time, to raise as much as $86 million to fund its operations, but the shrinking IPO window forced Light Sciences to rethink entering the public markets.

Only four companies have managed to go public so far in 2008, and of those, two gained listings on foreign exchanges and one, RXi Pharmaceuticals Corp., went public without an accompanying financing. Only one, Bioheart Inc., of Sunrise, Fla., squeaked through the U.S. IPO window with a meager $5.8 million offering in February. (See BioWorld Today, Feb. 21, 2008.)

That trend makes Light Sciences all the more grateful for a successful Series C round.

"Thanks to this Series C, we're not in a position of having to raise money now," Littauer said. "So we'll see what transpires in the market" before deciding the next move.

The company did not disclose names of the investors involved who participated in the Series C. Light Sciences previously raised a total of $97 million - $67 million in a late 2005 Series A round and $30 million in a Series B round in July 2007. (See BioWorld Today, July 7, 2007.)

Leerink Swann LLC served as exclusive placement agent and exclusive financial advisor for the transaction.

In other financings news:

• Abeome Corp., of Athens, Ga., received an undisclosed equity investment by Cato BioVentures and said it is collaborating with Cato Research Ltd., a Durham, N.C.-based contract research and development organization, to support its lead ovarian cancer project. To date, the company has developed monoclonal antibodies to four ovarian cancer cell lines and has begun screening those antibodies to see which ones might cause either cancer cell growth inhibition or death.

• Allon Therapeutics Inc., of Vancouver, British Columbia, completed its bought deal public offering of 19.1 million shares priced at $1.05 each for gross proceeds of $20 million. Underwriters, which include a syndicate led by GMP Securities LP and including Canaccord Capital Corp. and Cormack Securities Inc., have the option to purchase up to an aggregate of 2.9 million additional shares to cover any overallotments. If exercised in full, the overallotment option would add $3 million to the total proceeds. Allon plans to use the funds to advance its drug development programs and for working capital and general corporate purposes.

• Ariana Pharma, of Paris, raised €1.5 million (US$2.4 million) through a private placement arranged by Vizille Capital Innovation, a venture capital subsidiary of Credit Mutuel. The deal gives VCI a minority stake in Ariana, alongside existing shareholders, the Institut Pasteur and company management. The company, which develops support tools to accelerate drug discovery and development, said funds will be used for further work on its decision-support tools, as well as for strengthening its sales and marketing division and adding functionality to KEM, its lead knowledge extraction and management platform.

• Cytheris SA, of Paris, received a €1.5 million (US$2.3 million) no-interest loan from OSEO, France's national agency for industrial innovation, to support its ongoing clinical development program in hepatitis C. The OSEO award will provide partial funding for the HCV program involving Cytheris' lead product, recombinant human interleukin-7. Studies to date have demonstrated the potential of r-hIL-7 to expand and protect CD4-positive and CD8-positive T cells, and the company is conducting multiple international studies of IL-7 in HCV, HIV and cancer.

• Dicerna Pharmaceuticals Inc., of Cambridge, Mass., added $8.4 million in the second closing of its Series A round, bringing the total raised to $21.4 million. New investor Abingworth, along with existing investors Oxford Bioscience Partners and Skyline Ventures, participated in the second closing, and Vincent J. Miles, of Abingworth, joined Dicerna's board. Proceeds will be used to advance the company's pipeline of RNAi-targeted drugs in the areas of oncology, metabolic diseases and hepatitis C infection. Dicerna also expects to use its Dicer Substrate Technology in additional therapeutic areas, such as inflammation, immunology and cardiology, through collaboration with biotech and big pharma partners.

• Oramed Pharmaceuticals Inc., of Jerusalem, raised $5 million in a private placement of 8.7 million shares of common stock to a group of investors led by Montaur Capital Partners. Investors also received three-year warrants to purchase an aggregate of 4.3 million shares at an exercise price of 90 cents per share. Oramed will use those funds for its ongoing R&D efforts, as well as funding the next phase of clinical trials for its lead product, an oral insulin capsule. That product is in Phase IIa testing, with results expected within the next few weeks. The firm then plans to launch a Phase IIb trial in Type II diabetic volunteers to test the capsule's safety and efficacy over a six-week treatment period. Shares of Oramed (OTC BB:ORMP) gained 1 cent Tuesday to close at 61 cents.

• Pharmasset Inc., of Princeton, N.J., is raising gross proceeds of about $25.9 million through the sale of 1.5 million shares of common stock priced at $17.85 each in a registered direct offering to a group of selected institutional investors. Proceeds from the offering, expected to close on or about July 21, will be used for general corporate purposes, including the acquisition of complementary businesses or assets, the funding of clinical trials and the funding of in-licensing activities. Pharmasset develops drugs aimed at viral infections, with a primary focus on hepatitis B, hepatitis C and HIV. Morgan Stanley & Co. Inc., Canaccord Adams Inc., Cowen and Co. LLC and Leerink Swann LLC served as placement agents, and Morgan Stanley acted as lead manager. Shares of Pharmasset (NASDAQ:VRUS) gained 2 cents Tuesday to close at $18.53.