Scriptgen Inc., which earlier this year withdrew its initial public offering (IPO), raised $12 million to help fund the entry into clinical trials of two compounds.
Sofinov, of Montreal, and a fund managed by International Biomedicine Partners (IBP), of Basel, Switzerland, purchased $12 million of Scriptgen's convertible preferred stock.
"We filed our [IPO] registration statement in December 1997 and withdrew it in February 1998," said John Barberich, chief financial officer of Waltham, Mass.-based Scriptgen. "Since then, the market has gone from bad to worse for companies in the biotechnology arena. But we visited a handful of investors and met with interest."
Sofinov had heard about Scriptgen's collaboration with BioChem Pharma, of Laval, Quebec, he said. IBP was put together by former executives of Basel, Switzerland-based Roche Holding Ltd., a subsidiary of which -- Hoffman-La Roche Inc., of Nutley, N.J. -- is collaborating with Scriptgen.
Scriptgen entered into a 1997 deal with BioChem Pharma, in which the latter company made a $20 million equity investment in Scriptgen. Scriptgen is using its high-throughput technologies, Screen for Compounds with Affinity for Nucleic Acids (SCAN) and Any Target Ligand Affinity Screen (ATLAS) to accelerate the discovery of small-molecule drugs for hepatitis B.
ATLAS and SCAN measure the affinity of compounds that bind to targets even before the gene functions are well understood, so the company can deal with targets unsuitable for commonly used high-throughput screens. ATLAS is a high-speed drug discovery system to identify compounds that bind to target proteins.
Roche Deal Put Scriptgen On Swiss Fund's Radar
Basel-based IBP was familiar with Scriptgen by way of a program to identify drug candidates against a cancer-related target with Roche. In addition, Scriptgen and Roche inked a deal in 1995 to use ATLAS to find drug candidates for oncology applications.
The financing will take the company through 2000, Barberich said.
"We have $25 million in cash with this placement, and we expect to add onto the placement, probably in March," he said. "It will also be used for our antifungal and hepatitis C programs, which are both in preclinical [trials], but we expect to enter Phase I next year."
The company currently has three families of compounds in preclinical trials that demonstrate effectiveness against drug-resistant strains of Candida albicans, the most widespread cause of life-threatening fungal infections. Initial preclinical data indicate that these compounds may offer significant advantages over Diflucan (flucanazole) and Sporanoz (itraconazole), the current antifungal leaders. These advantages seem to be cidality -- the ability of a compound to kill a fungus -- rapid activity, and broad-spectrum efficacy. The company expects to file an investigational new drug application in 1999.
Diflucan, which is used to treat candidal infections and cryptococcal meningitis, is marketed by Pfizer Inc., of New York.
The financing will fund only the company's internal antifungal programs. A second antifungal program is being underwritten by partner Hoechst Marion Roussel AG, of Frankfurt, Germany. In 1997, Hoechst agreed to provide Scriptgen with payments through January 1998 totaling $6 million in the form of technology access fees, plus a $3 million equity investment. Scriptgen also receives research and development payments, as well as milestone and royalties. (See BioWorld Today, Nov. 24, 1997 p. 1.)
The second internal program that will benefit from the placement is for hepatitis C. That development program has no partner yet, Barberich said.
As part of the financing deal, Fritz Buhler, vice chairman of IBP, joined the board of directors of Scriptgen. *