Insys Therapeutics Inc. is seeking up to $86.25 million in an initial public offering to fund its efforts in the growing field of applying formulation and delivery technologies to existing drugs.
The Phoenix-based company is focusing on synthetic cannabinoid derivatives and specialized opioid markets to develop products expected to improve upon existing therapies.
Insys plans to get near-term revenues through its initial product candidate, a dronabinol hard gelatin capsule, or Dronabinol HG, for which it has filed an abbreviated new drug application. The product, for treating chemotherapy-induced nausea and vomiting, could be the first generic version of Marinol, a product based on the active ingredient in marijuana. Sales of Marinol totaled $133 million in 2006, Insys said.
The company, incorporated in 2002, also is focused on developing proprietary dronabinol formulations, such those suitable for room-temperature storage, and on improved formulations of the opioid pain drug fentanyl, which already is used in approved products and remains the subject of development efforts by other companies.
Insys said it intends to use revenue from Dronabinol HG sales to fund development of other product candidates and to establish a presence in the market.
In addition to a room-temperature formulation of dronabinol, Insys is developing syrup and nebulizer versions of the product.
In the fentanyl area, Insys has completed a Phase I trial of a fentanyl sublingual spray, or Fentanyl SL spray, for treating breakthrough cancer pain in opioid-tolerant patients. The spray product candidate is administered through delivery under the tongue, a method Insys said could lead to faster onset of action, improved dosing convenience and improved efficacy. Insys said it has designed two Phase III trials for the fentanyl spray.
The company's pipeline also has fentanyl line extensions, and other pain management and central nervous system product candidates, including products based on derivatives of morphine-6-O-sulfate and buprenorphine microspheres.
The company, if it gains approval of generic dronabinol, intends to build an internal sales force and marketing infrastructure focused primarily on pharmacy distribution channels. Then it would expand the operation if other product candidates were approved.
Insys has financed operations through the issuance of promissory notes to The John Kapoor Trust, a trust owned by company Chairman John Kapoor. It has spent about $17.6 million since its founding almost five years ago. This year the 17-employee company brought on a number of executives, including a CEO and chief scientific and financial officers.
The company reported a loss of $7 million 2006, and $5.8 million for the first six months of this year. It reported about $95,000 in cash as of June 30.
Kapoor owns about 69.7 percent of Insys. S. George Kottayil, a company co-founder and currently executive vice president of technology, owns about 12.7 percent of the firm.
Banc of America Securities LLC and UBS Investment Bank are lead underwriters for the IPO. JMP Securities and Natixis Bleichroeder Inc. are co-underwriters. The company plans to list its shares on Nasdaq under the symbol "INRX."
In other financings news:
• Corcept Therapeutics Inc., of Menlo Park, Calif., is raising about $10.1 million in a private placement of about 4.8 million shares at $2.10 per share. The investment is being led by Paperboy Ventures LLC, Corcept's largest shareholder. Other existing investors in the deal include Sutter Hill Ventures and Alta Partners LLP. Company board members also participated, along with other accredited investors. The initial sale of 3.6 million shares closed. Paperboy Ventures agreed to purchase the remaining 1.2 million shares, subject to stockholder approval. Proceeds will be used to conduct the next Phase III trial of Corlux for the treatment of the psychotic features of psychotic depression, and for other purposes.
• Lev Pharmaceuticals Inc., of New York, completed its previously announced $35 million registered direct offering of common stock and warrants. Lev issued 23.33 million common shares and five-year warrants to purchase up to 4.67 additional shares at 1.86 per share. Jefferies & Co. Inc. was lead placement agent. CIBC World Markets Corp. was co-lead placement agent, and Morgan Joseph & Co. Inc. was co-placement agent. In July, Lev submitted a biologics license application with the FDA seeking approval of the C1 inhibitor Cinryze for the acute treatment of hereditary angioedema. (See BioWorld Today, Aug. 1, 2007, and Aug. 15, 2007.)
• Advanced Cell Technology Inc., of Alameda, Calif., plans to privately offer up to $10 million of senior secured convertible debentures and warrants, with the timing and closing of the offering subject to market conditions. Proceeds are expected to fund working capital needs, including costs associated with advancing to Phase II trials the autologous myoblast stem cell therapy technology from the soon-to-be-acquired Mytogen Inc., of Charlestown, Mass. The companies entered a definitive merger agreement early this month, in which ACT agreed to acquire Mytogen in exchange for $5 million in stock, while assuming certain Mytogen liabilities, as well as warrants to purchase an additional 1.5 million shares of ACT stock at 75 cents each, subject to the achievement of certain milestones.