Dynavax Technologies Corp.'s immunostimulatory drug Tolamba, which stalled in a Phase III study earlier this year due to difficulty in determining ragweed-specific allergy response, is set to start new Phase III studies, including an environmental exposure chamber study, thanks to a $30 million financing agreement.
The money, from health care investment fund Deerfield Management, of New York, can be accessed by Dynavax over a three-year period based on predetermined milestones. A portion of it is earmarked for late-stage Tolamba development, while the remainder would be put toward the company's preclinical drug candidates in peanut and cat allergies. All three of those programs emerged from Dynavax's Toll-like receptor 9 (TLR9) technology, which is designed to link immunostimulatory sequences (ISS) to specific allergens.
Tolamba, an ISS linked to Amb a 1, the purified major allergen of ragweed, aims to suppress the Th2 cells responsible for inflammation associated with the allergy. Though it demonstrated promising efficacy in reducing total nasal symptom score (TNSS) in Phase II studies, the drug stumbled in the Phase III DARTT (Dynavax Allergic Rhinitis Tolamba Trial) study. Interim data from the 738-patient trial, reported in January, showed no meaningful ragweed-specific allergic disease in any of the treatment or placebo groups, making it impossible to measure the drug's treatment effect.
Dynavax halted the DARTT study, sending its shares (NASDAQ:DVAX) tumbling 30 percent that day to close at $5.96. (See BioWorld Today, Jan. 9, 2007.)
Shares of Dynavax closed at $4.52 Thursday, up 16 cents.
The problem with that Phase III study, Dino Dina, Dynavax's president and CEO, told investors during a conference call, was that patients were enrolled in the trial based simply on their histories and skin test reactivity, yet more than 60 percent of patients in the placebo group recorded no ragweed-positive symptoms, according to study data. Subset analysis, however, indicated Tolamba's efficacy in regions where ragweed allergy has greater prevalence, suggesting that the drug can succeed in a trial designed with more stringent site and patient selection. So the Berkeley, Calif.-based firm will begin its renewed Phase III Tolamba program with 300-patient environmental exposure chamber study.
That approach "offers the ability to confirm that patients have a high response" to the allergen, Dina said. Patients who meet that criterion will be enrolled in the study, randomized to receive either Tolamba or placebo and then challenged with the allergen to determine efficacy. Dynavax expects to initiate the chamber trial in the fourth quarter, with results anticipated in the first half of 2008. The company then will start a Phase III field study - this time limiting trial sites to specific regions and instituting a more precise screening process for patients. Pending positive results, it could file a biologics license application in 2010.
Dina declined to disclose the specifics of the patient screening process for the field study, but said, "We're pretty sure that we can do a moderately-sized one-year study and get very meaningful results."
Securing adequate funding was the last step before moving forward with the late-stage Tolamba program, and the commitment from Deerfield will "eliminate much of the uncertainty that surrounded the program," Dina said. It also gives a nice boost to the company's peanut allergy and cat allergy programs, which are expected to reach the clinic in 2009.
Under the terms of the financing, which is structured as a non-interest-bearing loan, Dynavax will be able to draw down funds upon the completion of program milestones, with repayment of a portion of the Tolamba loans contingent upon positive results of the chamber and field studies. If the company opts to discontinue the program, Dynavax has no obligation to repay Deerfield up to $9 million in funds set aside for Tolamba. Deerfield will receive an annual 5.9 percent cash commitment fee, plus milestone-driven payments in the form of warrants. The New York-based investment firm gets 1.3 million warrants upon execution of the loan agreement, and if all milestones are achieved, would receive a total of 5.6 million warrants over the course of the agreement.
While its TLR9 program moves forward with Deerfield's help, Dynavax continues to advance other products in its pipeline. Last week, the company finished enrolling more than 2,000 patients in its Phase III pivotal study of Heplisav, a hepatitis B vaccine. A second Phase III study is expected to complete enrollment before the end of this month, and "we're geared toward a BLA submission next year," Dina said.
The company is testing the ability of its TLR9-activating ISS platform to enhance monoclonal antibodies and chemotherapy in cancer, and has TLR9 agonists in a Phase II trial in combination with rituximab (Rituxan, Genentech Inc., Biogen Idec Inc.) in non-Hodgkin's lymphoma and in a Phase I study in combination with chemotherapy in metastatic colorectal cancer. Dynavax anticipates moving into clinical studies next year with its influenza vaccine, and, in collaboration with London-based AstraZeneca plc, the company is identifying clinical candidates against asthma and chronic obstructive pulmonary disease.
Dynavax reported a net loss of $13.1 million, or 33 cents per share, for the first quarter of 2007. As of March 31, the company had cash, cash equivalents and marketable securities totaling $71.3 million.
In other financings news:
• Alchemia Ltd., of Brisbane, Australia, raised $15.2 million in a private placement involving U.S. and Australian investors. The company issued 12.5 million shares in the U.S. and 6.5 million shares to existing Australian shareholders at 80 cents per share. Proceeds from the oversubscribed placement will support ongoing clinical development of HyCAMP in colorectal cancer and will accelerate the commercial development of the HyACT cancer drug delivery platform. ABN AMRO Morgans and Blueprint Life Science Group LLC served as corporate advisors for the transaction.
• ArQule Inc., of Woburn, Mass., closed the purchase of an additional 502,000 shares of common stock, pursuant to the underwriters' partial exercise of their overallotment option, in connection with its recent public offering. The total money raised from the sale of 7.5 million shares is $58.1 million. Proceeds will be used to fund research and development efforts, including clinical trials, and for general corporate purposes, including working capital. UBS Investment Bank and CIBC World Markets acted as joint book-running managers, while Leerink Swann & Co., Fortis Securities LLC and Rodman & Renshaw LLC were co-managers. (See BioWorld Today, June 15, 2007.)
• Diamics Inc., of Novato, Calif., said Inverness Medical Innovations Inc., of Waltham, Mass., committed a $6 million staged equity investment, acquiring 51 percent of the company and gaining a seat on Diamics' board. Under the terms, Inverness will provide strategic assistance in areas such as assay development, product design, manufacturing and distribution, and both companies will work to exploit and develop Diamics' point-of-care technology.
• Lumera Corp., of Bothell, Wash., filed a $50 million universal shelf registration statement to offer and sell, from time to time, shares of common stock. Terms will be established at the time of the offerings. Proceeds would be used to fund development of the company's products and for general corporate purposes, including capital expenditures and working capital. Lumera, a nanotechnology company, designs molecular structures and polymer compounds for the bioscience and communications/computing industries.
• MultiCell Technologies Inc., of San Diego, and Fusion Capital Fund II LLC agreed to terminate the amended and restated common stock purchase agreement dated Oct. 5, 2006, for the purchase of up to $8 million in MultiCell common stock. That termination will release about 5 million shares previously committed to fulfilling the obligations of the agreement. The company said it will seek financing from other sources to fund its planned Phase IIb trial of MCT-125 in multiple sclerosis patients suffering chronic fatigue.
• Viroblock SA, of Geneva, completed its first round of equity funding, which was led by private investor Peter Pfister, Fongit Seed Invest SA and Initiative Capital Romandie SA. Viroblock said it is developing a new generation of antiviral products with a novel mechanism of action against enveloped viruses. Viroblock was founded in October 2005 by Donald Wallach, a scientist and academic who also is a pioneer in the research of liposome systems, the company said.