With four products on the market and another three in the clinic, Pharmion Corp. is nearly doubling its cash position through a public offering.

The Boulder, Colo.-based company is raising $120 million through the sale of 4 million shares at $30 per share, a slight discount to Thursday's closing price of $30.50. Shares (NASDAQ:PHRM) traded down 50 cents Friday to close at $30.

Pharmion will net an estimated $112.7 million from the offering, or $129.7 million if the underwriters fully exercise their option to purchase 600,000 additional shares. That money will supplement the company's $132.9 million in cash, cash equivalents and short-term investments reported as of March 31.

In 2006, Pharmion incurred a net loss of $91 million, despite net product sales of $238.6 million. Sixty percent of those sales came from the subcutaneously administered pyrimidine nucleoside analogue Vidaza (azacitidine), licensed from Pharmacia Corp. (now part of Pfizer Inc.) and approved for myelodysplastic syndromes in the U.S., South Korea, Switzerland, Israel and the Philippines. Remaining sales were attributable to the multiple myeloma drug thalidomide, which Pharmion licensed from Celgene Corp. in several ex-U.S. territories; the deep-vein thrombosis drug Innohep (tinzaparin); and the antithrombin agent Refludan (lepirudin).

Notably, $78.8 million worth of Pharmion's 2006 expenses were attributable not to operating costs, but to acquisition-related charges. In pursuit of its strategy to acquire, develop and commercialize hematology and oncology products, Pharmion licensed U.S. and European rights to the HDAC inhibitor MGCD0103 from MethylGene Inc. and bought Cabrellis Pharmaceuticals Inc. for its Phase II anthracycline lung cancer drug, amrubicin. In late 2005, the company also licensed rights in several ex-U.S. countries to the late-stage prostate cancer drug satraplatin from GPC Biotech AG. (See BioWorld Today, Dec. 21, 2005; Feb 1, 2006; and Nov. 17, 2006.)

In 2007, Pharmion might reach profitability - acquisitions notwithstanding - based on a projected $240 million to $250 million in sales and $223 million to $228 million in expenses. But the company's prospectus for the current offering stated that some of the proceeds may indeed be used for acquisitions. Company officials did not return calls seeking comment.

Pharmion also said in its prospectus that some of the proceeds will go toward the expansion of its commercial organization in anticipation of additional regulatory approvals. Earlier this year, the company received FDA approval of a label expansion for Vidaza to include intravenous administration, and a European approval filing for the drug is expected late in the year pending positive results from an ongoing Phase III trial in high-risk myelodysplastic syndrome patients.

Thalidomide and satraplatin also will be the subject of regulatory filings this year - the former already is under European review for approval in multiple myeloma, and the latter is targeted for a European approval filing this quarter in the second-line treatment of prostate cancer.

Aside from the portion set aside for working capital, the rest of the proceeds from the offering will be used to fund clinical studies.

In addition to its ongoing Phase III trial, Vidaza is being evaluated in several other clinical studies, including trials of an oral formulation and trials combining the drug with MGCD0103 for hematological cancers. MGCD0103 also is being evaluated in single-agent trials. Additionally, amrubicin is in Phase II studies for small-cell lung cancer, with a Phase III trial planned later this year. A Phase II trial combining amrubicin with Herceptin (trastuzumab, Genentech Inc. and F. Hoffmann-La Roche Ltd.) in metastatic breast cancer also is slated to kick off this year. A handful of other studies evaluating Pharmion's drugs in new indications or combinations are in the works or under way.

The offering is expected to close Wednesday, subject to customary conditions. Banc of America Securities LLC is acting as sole book-running manager, with Cowen and Co. as co-lead manager. Co-managers are Pacific Growth Equities LLC; Friedman, Billings, Ramsey & Co. Inc.; and HSBC Securities (USA) Inc.

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