Washington Editor

Penwest Pharmaceuticals Co. said it expects to raise $25.1 million in a private placement of stock and warrants. The Danbury, Conn.-based firm said it has agreed to sell 8.14 million shares of common stock at a price of $3.08 per share.

The company said it intends to use the net proceeds to fund development of product candidates in its pipeline, including a Phase IIb clinical trial of its oral extended-release chronic pain drug nalbuphine ER and Phase I trials of its neurological compound A0001.

The funds also will go toward working capital and other general corporate purposes, the firm noted in a statement.

Penwest reported last month that a Phase IIa clinical trial of nalbuphine ER failed to meet its primary endpoint of the sum of pain intensity differences between baseline and day 21.

The firm blamed the failure primarily on patient dropouts in the first week of dosing.

However, Penwest said, the drug achieved a number of the study's secondary endpoints, including demonstrating statistical significance in the intent-to-treat population when compared with placebo, as measured by the Global Assessment of Pain Control (p=0.006) and by the Integrated Assessment of Pain Intensity and Rescue Medication Use (p=0.009).

The randomized, double-blind, placebo-controlled, dose-escalation Phase IIa trial evaluated the analgesic efficacy of nalbuphine ER in 138 patients with chronic pain secondary to osteoarthritis of the knee or hip. Patients enrolled in the trial were given the lowest dosage of the drug for week one, increased to a mid-dose level for week two and increased to the highest dosage studied for week three. The study group included a 2-to-1 randomization of patients on drug vs. placebo.

Penwest concluded that the efficacy of nalbuphine ER in the Phase IIa trial was sufficient to support its continued development. The company plans to launch a Phase IIb trial by summer, which is expected to take about one year to complete.

Penwest also studied nalbuphine ER, designed to be taken as a twice-daily tablet, in a Phase IIa study for an acute pain model in which a single dose of the drug reduced mean pain intensity in a dose-dependent manner over a 12-hour study period when compared with placebo.

Penwest partnered with Chadds Ford, Pa.-based Endo Pharmaceuticals to develop and commercialize Opana ER (oxymorphone extended release), which received U.S. approval by the FDA in June 2006 and now is marketed worldwide.

The firm has granted other companies access to its TIMERx oral controlled-release delivery system, which precisely and predictably controls the release of the drug.

As of Sept. 30, Penwest had $29.9 million in cash, cash equivalents and marketable securities.

Shares of Penwest (NASDAQ:PPCO) rose 26 cents Thursday, to close at $3.29.

In other financing news:

• NanoBio Corp., of Ann Arbor, Mich., said it has completed the third $10 million tranche of a $30 million equity funding from Perseus LLC. The firm said the funding has enabled it to conduct Phase II clinical trials on its two lead products, topical lotions NB-001 for herpes labialis, or cold sores, and NB-002 for onychomycosis, or nail fungus. NanoBio said it has completed Phases IIa and IIb trials of NB-001, while Phase II trials of NB-002 are expected to be completed by the first quarter of 2009. The funding also has supported NanoBio's animal studies of its nasal vaccines against influenza, hepatitis B and other pathogens.

• Epicept Corp., of Tarrytown, N.Y., said it expects to raise about $4.7 million from a public offering of stock and warrants. The firm said it is pricing about 5.4 million shares of common stock at 92.3 cents per share, along with five-year warrants to purchase an additional 2.7 million shares at 86 cents per share.