Gene therapy firm Neurologix Inc. bolstered its cash position with a $15 million private placement to advance its lead programs targeting Parkinson's disease and epilepsy.
The Fort Lee, N.J.-based company placed newly created Series D convertible preferred stock priced at $35 each with previous investor General Electric Pension Trust and new investor Corriente Master Fund LP. Each share of Series D stock is convertible into about 30.17 shares of common stock. The company also issued warrants to purchase about 3.2 million shares of common stock priced at $1.39 per share.
The financing was hardly unexpected, as Neurologix's executives expressed the need for additional funds earlier this month when the firm reported its third-quarter earnings. As of Sept. 30, the company, which posted a net loss of $1.9 million, or 7 cents per share for quarter, had about $6.3 million in cash, enough to fund operations through the first quarter of 2008. Neurologix has not specified exactly how far the latest funding should extend, but "we're hoping the money will get the company through 2009," said Marc Panoff, chief financial officer.
"Our goal is to use the funds to get through the next major milestone," he added. That milestone includes an upcoming Phase II study of NLX-P101 in Parkinson's disease and Phase I development of NLX-E201 in epilepsy.
Using a gene transfer therapeutic approach, NLX-P101 is designed to inject a therapeutic gene, specifically glutamic acid decarboxylase (GAD), into the subthalamic nucleus, the region of the brain known to function abnormally in Parkinson's patients. The subthalamic nucleus is the same region targeted by deep brain stimulation, one of the few treatment options for patients with advanced disease. Neurologix's approach aims to restore function to GAD to increase the production of gamma-aminobutyric acid (GABA), an inhibitory neurotransmitter shown to calm the overactive subthalamic nucleus.
What sets NLX-P101 apart from other Parkinson's programs is that it's not directed to increase dopamine uptake. "That's our major differentiating point," said Neurologix President and CEO John Mordock. "Dopamine production is difficult to control" so "our aim is to go in and directly produce GABA" to turn off hyperactivity in the subthalamic nucleus.
That approach also might allow NLX-P101 to avoid some of the side effects typical of dopamine-stimulating agents, since dopamine, while well tolerated in the basal ganglia, is not as well received in other parts of the brain, leading to dyskinesia and other adverse effects, Mordock said.
Data from a 12-patient Phase I study, published earlier this month in The Proceedings of the National Academy of Sciences, showed that an injection of adeno-associated virus vector carrying GAD into one side of the subthalamic nucleus resulted in improvements in both clinical symptoms and abnormal brain network activity compared to the untreated side of the brain at six months. The upcoming Phase II trial is designed as a six-month, 40-patient, confirmatory study, with an additional six months to focus on safety.
Earlier in the pipeline, Neurologix has NLX-E201, a neuropeptide Y gene transfer product that is set to start Phase I testing in patients with temporal lobe epilepsy. For many patients with temporal lobe epilepsy, existing anti-epileptic drugs do not adequately control seizures, and the only other treatment option involves the surgical removal of the temporal lobe.
"We're always looking at underserved patient populations," Mordock told BioWorld Today. The company's gene therapy programs target "diseases with specific focal points and areas of well established mechanisms of action."
Neurologix also has some preclinical-stage programs and has said other gene therapy approaches might work in areas such as Huntington's disease. But, for now, "our principal focus is on our two lead programs," Mordock said. "That's what this funding is for."
Shares of Neurologix (OTC BB:NRGX) rose 15 cents, or 14 percent, Monday to close at $1.24.
In other financings news:
• CytRx Corp., of Los Angeles, filed a $100 million shelf registration statement, which would allow it to raise funds, from time to time, through common stock offerings. Specific terms will be disclosed at the time of any offerings. Proceeds will be used for working capital and for general corporate purposes, including product development activities, capital expenditures, potential acquisitions and other business opportunities. Shares of CytRx (NASDAQ:CYTR) closed at $3.09 Monday, down 14 cents.
• Ondine Biopharma Corp., of Vancouver, British Columbia, is raising C$5.5 million (US$5.6 million) in gross proceeds from a nonbrokered private placement of 5 million units - each unit consisting of one common share and one-half of one common share purchase warrant - priced at C$1.10 apiece. Proceeds will be used for the continued research and development of products based on the company's photodisinfection technology, for working capital and for general corporate purposes. Ondine's stock (TSX:OBP) closed at C$1.27 Monday, up C7 cents.
• Reliant Pharmaceuticals Inc., of Liberty Corner, N.J., withdrew its initial public offering filed in August. That move follows the specialty pharma firm's agreement last week to be acquired by London-based GlaxoSmithKline plc for $1.65 billion. (See BioWorld Today, Nov. 26, 2007.)
• Yaupon Therapeutics Inc., of Radnor, Pa., closed a $14.5 million Series C round to support its multiple ongoing clinical programs, which include pivotal studies of Clearazide, a topically delivered cytotoxic agent for cutaneous T-cell lymphoma, and Phase II studies of Lobeline, a dopamine-modulating agent that is in development for methamphetamine addiction and also might have potential in neuropsychiatric disorders, such as attention deficit disorder and Tourette's syndrome. Vivo Ventures led the financing, with participation from Palo Alto Investors LLC and private investors.