Small biotech firm Nile Therapeutics Inc. merged with a public shell company shortly after raising $20 million in its first equity round to fund ongoing cardiovascular drug development.
Founded only a couple of years ago by New York venture firm Two River Group Holdings LLC to develop CD-NP, a clinical-stage compound for heart failure, Nile was looking to access the capital markets and opted for a reverse merger as a "cleaner capital structure" than the more traditional initial public offering, said Nile CEO Peter Strumph.
The company agreed to merge with SMI Inc., a public shell trading on the Over-the-Counter Bulletin Board. The combined company, renamed Nile Therapeutics, is expected to be assigned a new symbol, though shares will continue trading under "SPDU" until then. Upon news of the merger, the stock jumped 95 cents, or 46 percent, to close Tuesday at $3.
Prior to gaining a public listing, Nile secured at least two years of funding with a private equity sale of 7 million shares to a syndicate of investors led by Greenwich, Conn.-based Wexford Capital LLC. The $20 million round will be used for further development of CD-NP and to move a second compound, the recently in-licensed 2NTX-99, into the clinic, Strumph said, adding that Nile also is "looking for additional business development opportunities," such as additional in-licensings, collaborations and merger and acquisition deals.
Strumph, a former executive at CV Therapeutics Inc., came on board as Nile's CEO in May, and heads the staff of four full-time employees. Nile operates using an outsourcing model and relies heavily on its scientific advisory board of cardiac disease experts, which is chaired by John Burnett, professor at the Mayo Clinic College of Medicine and co-inventor of CD-NP. Nile licensed rights to CD-NP from the Mayo Foundation for Education and Research.
A chimeric natriuretic peptide, CD-NP is a selective NPRB agonist that has shown renal enhancement and cardiac unloading properties, with minimal hypotensive effects, in preclinical studies. Nile recently completed a Phase I trial in healthy volunteers, confirming that the synthetic peptide was able to activate its target receptor in humans, and that it preserved renal function and caused increases in natriuresis and diuresis.
"We're planning additional Phase I trials" in heart failure patients, Strumph told BioWorld Today, and could later explore CD-NP in another potential indication.
Behind CD-NP, Nile has rights to 2NTX-99, a small molecule aimed at inhibiting the synthesis and action of thromboxane, enhancing production of prostacyclin and supplying nitric oxide to the vasculature. Based upon its mechanism, the company believes 2NTX-99 might have potential against several atherosclerotic, thrombotic and microvascular diseases, and is preparing an investigational new drug application to take the program into the clinic, "perhaps next year," Strumph said.
While the company also will look for additional compounds to add to its portfolio, Nile has no plans to expand into the research side. "The niche for us is pre-IND through clinical development," said Strumph, adding that the Berkeley, Calif.-based company intends to keep future business development options open, though it likely will seek partnerships for its drug candidates down the road, especially for compounds targeting the large cardiovascular market. In those cases, "we'll probably look for a company with expertise in that area" for help with late-stage trials and commercialization, he said.
Along with Wexford Capital, investors in Nile's financing round included RIT Capital Partners plc, of London; Life Science Capital Master Fund; and other institutional investors. Paul Mieyal, of Wexford, joined Nile's board.
Riverbank Capital Securities Inc., an affiliate of Two River Group, acted as placement agent.
In other financings news:
• AdvanDx Inc., of Woburn, Mass., closed a $15 million Series C financing round from new investor bioMerieux SA, of Marcy l'Etoile, France, and existing investors LD Pensions and SLS Venture. Proceeds will be used to accelerate the commercialization of the company's product pipeline through its sales and marketing operations, as well as to expand its research and development activities. AdvanDx develops in vitro molecular diagnostic products for rapidly identifying infectious pathogens, with the aim of improving patient outcomes while reducing hospital costs.
• Ambrilia Biopharma Inc., of Montreal, filed a preliminary short-form prospectus with Canadian authorities for a proposed offering of common shares. Pricing will be determined based on market conditions, though the company is expecting to raise about $15 million, with net proceeds going toward ongoing Phase III trials of an improved formulation of Octreotide, as well as the development of a new formulation of Goserelin and further lead optimization of HIV integrase inhibitors. Proceeds also will be used to support other antiviral development activities and for working capital and general corporate purposes. Canaccord Capital Corp. is the lead manager, and the syndicate also includes Dundee Securities Corp. and Loewen, Ondaatje, McCutcheon Ltd. Shares of Ambrilia (TSX:AMB) closed unchanged Tuesday at C$2.16.
• Ganymed Pharmaceuticals AG, of Mainz, Germany, added €3.5 million in the second closing of its Series C financing, bringing the total round to €37.2 million (US$50.7 million). Money will be used to develop cancer antibody products emerging from its in-house discovery engine, such as compounds targeting the tumor-specific cell surface antigens GC182 and GT468. The capital increase was fully subscribed by ATS Beteiligungsverwaltung GmbH, of Munich, Germany, which also participated in the first closing. Hans-Beat Gurtler was named to the company's board.