Arena Pharmaceuticals Inc. priced its previously announced public offering of 11 million shares of common stock at $9.91 per share.
The offering price was equivalent to the San Diego-based company's closing price on Thursday, and shares (NASDAQ:ARNA) closed at $9.91 on Friday, unchanged.
The deal will bring in estimated net proceeds of $103.1 million. If joint book-running managers CIBC World Markets and UBS Investment Bank exercise their option to an additional 1.65 million shares to cover overallotments, that total could increase to $118.7 million.
Those proceeds will supplement Arena's already healthy cash balance - the company reported cash, equivalents and short-term investments of $339.1 million as of Sept. 30, after burning through operating expenses of $40.5 million during the quarter. But expenses could rise later this year and early next year as Arena begins three new Phase III trials.
One Phase III trial is already under way for obesity drug lorcaserin. Initiated in September 2006, it recently completed a planned interim analysis by an independent echocardiographic data safety monitoring board, which recommended continuation. Two more trials with the 5-HT2C serotonin receptor stimulator are slated to kick off by the end of the year. (See BioWorld Today, Sept. 13, 2006.)
Arena also is planning a Phase III trial in 2008 for APD125, an inverse agonist of the 5-HT2A serotonin receptor for insomnia. Initial data from an ongoing Phase II trial demonstrated statistically significant improvements in measurements of sleep maintenance vs. placebo. The company also has a Phase I arterial thrombosis drug, APD791, two partnered programs with Merck & Co. Inc. and Ortho-McNeil Inc., and several research programs.
The company was not available for comment but said in its prospectus that proceeds from the financing will be used for discovery and development as well as for general corporate purposes and, potentially, acquisitions.
Chelsea Pads Cash Position
Chelsea Therapeutics International Inc. entered definitive agreements with investors to raise $48.9 million through a registered direct offering of 7.4 million shares of common stock priced at $6.62 per share.
After closing at the offering price of $6.62 on Thursday, Chelsea's shares (NASDAQ:CHTP) rose 29 cents to close at $6.91 on Friday.
Chelsea executives were not available for comment, but the Charlotte, N.C.-based company said in its prospectus that it expects to net $45.8 million from the deal. Those proceeds will be used for research, clinical trials, general working capital and potential licensing or acquisitions.
Clinical trials in the hopper include a Phase III trial with droxidopa in symptomatic neurogenic orthostatic hypotension, which is expected to begin in the fourth quarter. Droxidopa is a synthetic precursor of norepinephrine approved in Japan for hypotension and other indications. Chelsea licensed the drug from Dainippon Sumitomo Pharma Co. Ltd. last year.
The company also is planning Phase II trials of droxidopa in hypotension associated with dialysis and fibromyalgia, as well as studies of antifolate molecule CH-1504 in rheumatoid arthritis.
As of the end of the second quarter, Chelsea reported $23 million in cash and short-term investments. Prior to the financing, the company projected it would have $12 million left at the end of the year and would need $40 million to cover expenses in 2008. Based on those projections, the financing should carry Chelsea through next year.
Leerink Swann LLC served as lead placement agent for the financing, with Oppenheimer & Co. Inc. and Punk Ziegel & Co. serving as co-placement agents.
In other financing news:
• Vanda Pharmaceuticals Inc., of Rockville, Md., said it no longer intends to offer $100 million worth of convertible senior notes, as announced Thursday. The company said that despite strong demand, market conditions resulted in unfavorable terms. Investors haven't been thrilled with the debt plan and pushed the stock down 25.7 percent on Thursday. On Friday, shares (NASDAQ:VNDA) lost 2 cents, to close at $11.13. Proceeds had been intended to support the commercialization of the atypical antipsychotic iloperidone, for which Vanda submitted a new drug application for schizophrenia in September. (See BioWorld Today, Sept. 28, 2007.)