Callisto Pharmaceuticals Inc., of New York, said its subsidiary Synergy Pharmaceuticals Inc. closed a $3 million private placement and at the same time Callisto engineered a reverse merger, all aimed a bolstering Synergy's development of SP-304, its guanylate cyclase C receptor agonist, for chronic constipation and constipation-predominant irritable bowel syndrome.

With the closing of the placement, Callisto exchanged all of the outstanding stock of Synergy for approximately 70 percent of the common stock of Pawfect Foods Inc., a defunct Florida-based Internet pet food company that is traded on the Over the Counter Bulletin Board. Pawfect has filed to change its name to Synergy Pharmaceuticals, and will be a wholly owned subsidiary of Callisto, which retains a 68 percent interest in Synergy and its GC-C receptor agonist platform.

"Raising critically needed capital to fund the continuing development of SP-304 and retaining a 68 percent interest in the drug's future, given current market conditions, is very encouraging," said Gary S. Jacob, Callisto CEO and president and acting CEO of Synergy. Jacob added that separating Synergy's gastrointestinal drug development from Callisto's cancer drug development "will allow the market to value SP-304 appropriately, which the market was not able to do while SP-304 remained completely under Callisto's capital structure and depressed market price. We believe Callisto investors and the investors in the new Synergy Pharmaceuticals are best served through this transaction."

Jacob, Callisto Chairman Gabriele M. Cerrone, Callisto Director John Brancaccio, Chris McGuigan and Thomas H. Adams were appointed to constitute the new board of directors, and Jacob was appointed president and acting CEO of Pawfect pending that firm recruiting an independent CEO.

In April, Synergy filed an investigational new drug application with the FDA for SP-304 (Guanilib), an analogue of uroguanylin, a natural hormone produced in the gastrointestinal tract that is a key regulator of intestinal function. It works by activating the GC-C receptor on intestinal epithelial cells, promoting fluid and ion transport. Preclinical animal studies showed Guanilib was well tolerated and had almost no absorption systemically into the body, exerting its effect locally on GC-C receptors within the gut. The company began a Phase I trial of Guanilib in June to assess safety and tolerability of an oral dose of SP-304 in healthy adult volunteers.

In April, Callisto said it would appeal a decision by Amex to delist the company because of failure to comply with financial requirements for listing standards.

In other financing news:

• Cardium Therapeutics, of San Diego, raised $3.34 million through a registered direct offering. Cardium intends to use the funds for general working capital purposes. Empire Asset Management Co. acted as financial advisor and the sole placement agent for the transaction.

• Optimer Pharmaceuticals Inc., of San Diego, has received commitments to raise $12.2 million in a registered direct offering. The investors agreed to buy 1,443,396 shares of the company's common stock at a price of $8.48 per share, its closing price Friday. The investors were not identified, and the company said only that the funds would be used for ongoing programs and general corporate purposes. Last Thursday, Optimer announced that it has met the primary endpoint in its oral broad-spectrum antibiotic, Prulifloxacin, in the first of two pivotal trials.

• Vyteris Inc., of Fair Lawn, N.J., received a $2.5 million loan from Ferring Pharmaceuticals, of Saint-Prex, Switzerland, which represented an advance on a potential milestone payment for a Phase II trial of a product for female fertility treatment. The loan bears interest at the rate of 10 percent per annum. If Ferring elects to proceed with the Phase II, the principal amount of the loan will be paid off through application of the Phase II payment, which otherwise would be due under a license agreement between Vyteris and Ferring.