With recently approved ophthalmic drug AzaSite expected to hit the market in just a few weeks as a treatment for bacterial conjunctivitis, Inspire Pharmaceuticals Inc. bolstered its cash position with a $75 million investment from private equity firm Warburg Pincus LLC.
Inspire, of Durham, N.C., entered a securities purchase agreement to sell $75 million of exchangeable preferred stock based on a price of $5.35 per common share. The deal, expected to close this week, will ensure the "successful launch of AzaSite," expected in mid-August, and will help fund the company's four Phase III-stage programs, said Tom Staab, Inspire's chief financial officer.
News of the financing lifted the company's stock by 23.2 percent Wednesday. Shares of Inspire (NASDAQ:ISPH) gained $1.16 to close at $6.27.
AzaSite, an eye-drop formulation of azithromycin ophthalmic solution 1 percent, gained the FDA's blessing in late April for ocular infections in adults and children caused by susceptible isolates of CDC coryneform group G, Haemophilus influenzae, Staphylococcus aureus, Streptococcus mitis group and Streptococcus pneumoniae. The product combines a topical version of the antibiotic azithromycin with DuraSite, an ophthalmic drug-delivery system from InSite Vision Inc. designed to increase ocular retention of the drug. Inspire licensed U.S. and Canadian rights to AzaSite from InSite in February in exchange for $32 million in up-front and milestone payments, plus double-digit royalties. (See BioWorld Today, Feb. 20, 2007, and May 1, 2007.)
The product expands Inspire's ophthalmic franchise, which already includes two products - Elestat (epinastine HCl ophthalmic solution 0.05 percent) for allergic conjunctivitis and Restasis (cyclosporine ophthalmic emulsion 0.05 percent for dry eye - sold in co-promotion with Irvine, Calif.-based Allergan Inc. The addition of AzaSite calls for a broader marketing group, and, to date, Inspire has "made a lot of substantial progress," Staab told BioWorld Today, such as "increasing our commercial organization from 64 people to 98," building a pediatric and primary care marketing infrastructure and conducting pre-launch marketing activities. The plan is to "hit the ground running and hit it hard," he said.
The annual U.S. market for ocular antibiotics is about $360 million.
Funds from the recent financing should carry the company "at least 10 months," Staab said, depending on the commercial uptake of AzaSite and on how quickly Inspire is able to advance its four late-stage products.
The most advanced of those is Prolacria (diquafosol tetrasodium) for dry eye, though it has been stymied temporarily in the regulatory process. Following two approvable letters, the company met with the FDA to begin trying to validate its use of staining scores in the central region of the cornea as a clinically relevant endpoint for the dry-eye indication, and an additional study likely will be needed for final approval.
Last year, Inspire started the first of two planned Phase III studies of denufosol tetrasodium in cystic fibrosis. That product is designed to enhance the lung's mucosal hydration and mucociliary clearance by stimulating the P2Y2 receptor. Denufosol tetrasodium has fast-track status in the U.S. and orphan drug status in both the U.S. and Europe.
Oral bilastine for allergic rhinitis completed Phase III testing in Europe, though Inspire and partner FAES Farma SA, of Madrid, Spain, amended their agreement after talks with the FDA indicated that additional clinical work and an expanded QT/QTc comparative trial, likely involving an approved antihistamine, would be needed for regulatory filing. Under the new agreement, FAES will be responsible for the additional work. Bilastine is a nonsedating, selective H1-antihistamine.
Inspire's fourth late-stage product, epinastine nasal spray, is getting ready to start Phase III testing. The company said last week that it plans to begin three pivotal trials and a six-month intranasal toxicology study in patients with allergic rhinitis. Two of the studies will be in seasonal allergic rhinitis, and one will be in patients suffering perennial disease.
Under the terms of the financing, Warburg Pincus will receive preferred stock that will be exchangeable for 100 shares of Inspire common stock upon stockholder approval. The company will amend its rights agreement to allow the equity firm to acquire beneficial ownership of up to the lesser of 32.5 percent of voting securities or 34.9 percent of outstanding voting securities plus outstanding exchangeable preferred stock.
Jonathan Leff, a managing director at Warburg Pincus, will join Inspire's board.