Washington Editor

Nastech Pharmaceutical Co. Inc. is bringing in $42.9 million by way of a public offering of 3.25 million common shares.

Per SEC regulations, officials at the Bothell, Wash.-based firm could not comment on the news, but it's safe to assume that the funding should bolster its research and development activities. Nastech is developing products based on technology that delivers large and small molecule drugs, as well as RNAi therapeutics, across mucosal barriers.

The RNAi program includes two candidates approaching clinical studies, one for influenza and the other in inflammatory diseases. The company brought in the flu product last year by way of acquisition, buying out the RNAi intellectual property estate of Galenea Corp., of Cambridge, Mass. Nastech's inflammatory disease candidate was accessed two years ago through a license to RNAi therapeutics directed against TNF-alpha from Alnylam Pharmaceuticals Inc., also of Cambridge. (See BioWorld Today, July 21, 2005, and Feb. 24, 2006.)

Additional internal work at Nastech is focused on a peptide YY (PYY) nasal spray product for obesity. Once partnered with Merck & Co. Inc., of Whitehouse Station, N.J., a product called PYY3-36 failed to demonstrate efficacy in a preliminary proof-of-concept obesity study, leading to the deal's dissolution last year. (See BioWorld Today, March 3, 2006.)

PYY is a naturally occurring hormone produced by specialized endocrine cells in the gut in proportion to the calorie content of a meal, and research has demonstrated its potential in regulating appetite control. Nastech is continuing the development on its own, recently indicating that plans are under way for a Phase II efficacy and safety trial following a dose-ranging study that evaluated PYY3-36's pharmacokinetic parameters and its effect on appetite, food intake and safety at various dose levels in obese patients.

Also, the company is working on a nasal insulin product, which is in early clinical development. Recent data from that product's first Phase I study showed that nasal insulin produced faster maximum plasma levels than a rapid-acting insulin injection and inhaled insulin, and also produced higher plasma insulin levels than inhaled insulin.

Additional Nastech programs are advancing in partnerships, most notably a potential $577 million deal with Cincinnati-based Procter & Gamble Pharmaceuticals Inc. on a nasal spray for osteoporosis, PTH1-34. There's also a potential $89 million agreement with Amylin Pharmaceuticals Inc. to develop a nasal spray formulation of that San Diego-based company's diabetes drug Byetta (exenatide). (See BioWorld Today, Feb. 2, 2006, and June 27, 2006.)

In Nastech's stock offering, which is being made pursuant to a $125 million shelf registration, the company is selling all the shares. New York-based UBS Investment Bank, which acted as the sale's sole bookrunner, has a 487,500-share overallotment option.

The added funding boosts Nastech's available cash reserves, which stood at about $54.2 million on Sept. 30. At that time, the company had about 22 million shares outstanding.

The offering contemplates a per-share price of $13.20, and on Thursday, the stock (NASDAQ:NSTK) moved into that range, dropping 94 cents to $13.12.