Strengthening its cash position by $25 million, Alteon Inc. is preparing to advance ALT-2074 and other organoselenium compounds, which were the subject of a recently expanded license agreement with OXIS International Inc.
Foster City, Calif.-based OXIS originally granted rights to that program, which is comprised of orally active compounds designed to mimic an enzyme believed to protect against excessive oxidation of lipids, to private firm HaptoGuard Inc. in a 2004 deal potentially worth $21 million. New York-based HaptoGuard merged with Alteon last year. (See BioWorld Today, Sept. 29, 2004.)
Under the amended licensing agreement, Alteon picks up exclusive worldwide rights to ALT-2074 and all related organoselenium compounds in OXIS' library for development and commercialization in all indications. In exchange, Alteon agreed to invest at least $7.5 million in OXIS over a three-year period. The company will make a nonrefundable $500,000 payment, in six monthly installments, with the remaining $200,000 upon the closing of its financing. The deal also includes milestone payments to OXIS, plus any sublicensing fees or royalties on any product sales. Alteon also will make an equity investment for net proceeds to OXIS of $500,000.
Shares of OXIS (OTC BB:OXIS) closed at 24 cents Monday, up 1 cent.
Executives from Alteon could not be reached for comment, though the company said in a press release that it intends to continue development of ALT-2074, a small-molecule organoselenium mimic of glutathione peroxidase, which could prove effective in treating diabetic patients with cardiovascular disease caused by high levels of circulating oxidized lipids. In preclinical studies, the compound demonstrated an ability to limit myocardial damage in animals transgenically engineered with a variant form of haptoglobin that poses an elevated risk for cardiovascular complications following a heart attack. Alteon is testing ALT-2074 in a Phase II trial aimed at reducing myocardial injury in diabetic patients undergoing angioplasty.
The company said another trial is in the works to study ALT-2074's effect on inflammatory biomarkers, and it also has plans to develop a diagnostic assay to determine which diabetic patients are at greatest risk due to the haptoglobin variant. Alteon might explore additional indications, as well.
Upcoming work on ALT-2074 will be funded by Alteon's planned private financing. The Montvale, N.J.-based firm agreed to sell and issue $25 million in shares of its Series B preferred stock and warrants to purchase 25 percent of the amount of stock issued in the financing. Rodman & Renshaw served as the placement agent.
The company, which reported a 2006 net loss of $17.7 million, or 22 cents per share, ended the year with cash, cash equivalents and short-term investments totaling $1.5 million, though it added an additional $3 million in January through a convertible note financing.
Besides ALT-2074, the company also continues work on alagebrium, a product that emerged from its own drug discovery program. An advanced glycation end-product crosslink breaker, alagebrium is in development for diastolic heart failure.
The compound previously completed several Phase I and Phase II trials, though the drug stumbled a bit in a Phase IIb study in 2005 that indicated its failure to work against systolic hypertension. At that time, the FDA also placed a clinical hold on alagebrium in a Phase IIa trial for erectile dysfunction in diabetics. However, alagebrium demonstrated in two trials an ability to decrease heart muscle thickness to reduce diastolic heart failure risk. (See BioWorld Today, June 13, 2005, and Feb. 15, 2007.)
Alteon's shares (AMEX:ALT) were unchanged Monday, at 9 cents.