Gene therapy firm Targeted Genetics Corp. is boosting its cash position through a $19.5 million private placement of 6.7 million shares priced at $2.91 each to fund ongoing development activities.
Net proceeds from the financing will total about $17.8 million and will "largely be focused on moving" the company's inflammatory arthritis compound, tgAAC94, along in the clinic, said David Poston, the Seattle-based firm's chief financial officer. Money also is expected to advance other pipeline candidates based on the company's recombinant adeno-associated virus (AAV) vector technology platform, which allows for the delivery of genes encoding proteins designed to improve gene function or RNA-interference to diminish or silence gene function.
The tgAAC94 candidate is designed to deliver a DNA sequence that encodes a form of TNF-alpha receptor to inhibit TNF-alpha, a well-known target in the inflammatory arthritis market thanks to blockbuster drugs such as Remicade (Centocor Inc.), Enbrel (Amgen Inc.) and Humira (Abbott Laboratories). Targeted Genetics' tgAAC94 is being developed as a supplement to those systemic anti-TNF-alpha therapies.
The company recently finished enrolling 120 patients in a Phase I/II study of tgAAC94 in inflammatory arthritis. Interim data from the first 61 patients to complete the dose-escalation portion, as reported at scientific conferences earlier this month, demonstrated safety and tolerability of single and repeat intra-articular injections of the drug to affected joints. At week 12 after treatment with tgAAC94, patients receiving the drug showed a trend toward decreased swelling and tenderness. Thirteen percent receiving the low dose, 14 percent receiving the medium dose and 33 percent on the highest dose achieved a 2-point reduction in swelling compared to none in the placebo group. Full study results are expected in mid-2008.
The latest financing, which will add to the $11.3 million in cash and cash equivalents reported at the end of the first quarter, should take the company "far into 2008," Poston told BioWorld Today, "and depending on our development plan for 2008, possibly into 2009."
Targeted Genetics last raised money through an $8.7 million private equity financing during the first quarter. The company, which reported a net loss of $3.8 million, or 30 cents per share, for the first three months of 2007, said it anticipated at full-year cash burn of $13 million to $16 million.
Beyond tgAAC94, the company is advancing an HIV candidate, tgAACO9, an AAV vector-based product designed to protect against HIV infection or prevent progression to AIDS in HIV-infected patients. That program is in Phase II development, with results expected in August, Poston said. Another HIV/AIDS program, in collaboration with the National Institutes of Health, is in preclinical development.
Targeted Genetics also is working on Mydicar (AAV1-SERCA2a), a product for congestive heart failure that is partnered with La Jolla, Calif.-based Celladon Corp. Mydicar, which is designed to deliver the SERCA2a gene to heart muscle tissue, recently began Phase I testing to evaluate a single coronary artery infusion of four dose levels in 12 subjects with ischemic heart or non-ischemic cardiomyopathy and NYHA Class III/IV symptoms of heart failure. A second stage of that trial is expected to randomize 33 patients to receive either Mydicar or placebo.
As part of the financing, Targeted Genetics also sold warrants to purchase 6.7 million additional shares at an exercise price of $3.25 per share. Rodman & Renshaw LLC acted as the placement agent.
The company's stock (NASDAQ:TGEN) fell 2 cents Friday to close at $2.76.
In other financings news:
• Northwest Biotherapeutics Inc., of Bothell, Wash., placed 15.8 million shares of common stock with foreign institutional investors priced at £0.95 each, all of which will be placed after giving effect to the company's 1-for-15 reverse stock split of its outstanding shares. Gross proceeds from the placement totaled about £15 million (US$30 million), and net proceeds are expected to total about £13.1 million. Northwest intends to use those funds to support clinical trials, product and process development, working capital and repayment of certain existing debt. As a result of the reverse stock split, every 15 shares of the company's common stock will be combined into one common share. Stockholders who would be entitled to fractional shares will receive cash in lieu of fractional shares. Northwest's stock will continue to trade on the Over-the-Counter Bulletin Board, and will be quoted, on a post-split basis, on the AIM market, beginning with the admission to trading June 22. Shares of Northwest (OTCBB:NWBT) fell 1 cent Friday to close at 12 cents.
• Nuvo Research Inc., of Mississauga, Ontario, is raising C$20 million (US$18.7 million) to fund studies required to support the resubmission of its Pennsaid new drug application in osteoarthritis, and for working capital and other general corporate purposes. The company entered an agreement with a syndicate of underwriters co-led by Westwind Partners Inc. and Dundee Securities Corp., under which they agreed to purchase 1 million units from Nuvo on a bought-deal basis and sell them to the public at C20 cents per unit. The company also granted underwriters an overallotment option to buy an additional 15 million units at the same price. Each unit consists of one common share and one-half of one warrant, each whole warrant being exercisable to acquire an additional common share priced at C30 cents each for 24 months. The offering is expected to close on or about July 12. Nuvo's stock (TSX:NRI) closed Friday at C20 cents, down C2 cents.