Ziopharm Oncology Inc. pulled in gross proceeds of $30.9 million in a private placement to advance ongoing clinical development of three lead cancer programs, two of which are expected enter pivotal testing this year.

The New York-based firm agreed to place units, comprised of one share of common stock plus a warrant to purchase 0.2 shares of stock, priced at $5.23, and at closing, will issue 5.9 million shares and warrants to buy about 1.2 million shares. The offering is expected to close on or around Feb. 22.

Ziopharm, which reported a net loss of $5.8 million, or 38 cents per share, for the fourth quarter, ended the year with a cash position of $28.4 million.

The additional funding "should get us to the end of 2008," said Jonathan Lewis, CEO.

During the next two years the company intends to continue focusing on its three lead cancer programs, starting with ZIO-101, an organic arsenic agent, expected to wrap up Phase II testing this year in the lead indication of myeloma. "We hope to initiate a pivotal trial by the end of the year," Lewis told BioWorld Today.

A second Phase II study of ZIO-101 is ongoing in hematologic cancers, such as leukemia and myelodysplastic syndrome, and the company anticipates launching a third Phase II trial this year in patients with primary liver cancer, he said.

Ziopharm also expects to start a pivotal trial this year with ZIO-201, a metabolite of ifosfamide, in advanced sarcoma. That product is finishing up Phase II testing as well. Later this year, ZIO-201 likely will enter additional Phase II studies in lymphoma and in a pediatric setting.

"We're also working on oral formulations of both" compounds, Lewis said. Though he didn't provide specific timetables for clinical development, Lewis said he hopes testing will start sometime this year.

For now, Ziopharm holds all rights to ZIO-101 and ZIO-201, and Lewis said the company will consider retaining North American commercialization in the initial niche indications of myeloma and sarcoma. Outside of North America, "we've begun dialogues" with potential partners, he added, "and for larger indications, we may decide it's more strategic and makes more sense to partner."

The company's third product, ZIO-301, also known as indibulin, is an antimitotic agent designed to bind to tubulin. That drug was acquired in November from Deerfield, Ill.-based Baxter Healthcare Corp. in exchange for undisclosed up-front, milestone and royalty payments. It is completing Phase I trials, and Ziopharm will use funds from its recent financing to move into Phase II in solid tumors.

Since its founding in 2004, Ziopharm has developed "a very strong plan," Lewis said. "Now we're very focused on execution, and this financing helps us get all of our ducks in a row."

The financing was led by Essex Woodlands Health Ventures and PTV Sciences, with participation from Ziopharm's existing investors, including ProQuest Investments, LB I Group Inc., Henderson Global Investors and two funds - Medical Biohealth Trends and Pharmaw/Health - advised by Medical Strategy from Germany. Oppenheimer & Co. Inc. served as the lead placement agent, while Paramount BioCapital Inc. and Griffin Securities Inc. acted as co-placement agents.

Ziopharm, which initially went public on the Over-the-Counter Bulletin Board through a reverse merger in September 2005, successfully jumped to the Nasdaq market last year. Its shares (NASDAQ:ZIOP) closed at $5.45 Friday, up 25 cents.

In other financings news:

• Palatin Technologies Inc., of Cranbury, N.J., closed its previously announced offering of 13.75 million shares priced at $2 each, which brought in gross proceeds of $27.5 million. Less expenses and commissions, the company expects to recognize net proceeds of about $26 million. Palatin works to discover and develop targeted, receptor-specific small-molecule and peptide therapeutics. Its lead product, bremelanotide, is in Phase II trials for male and female sexual dysfunction. Pacific Growth Equities LLC acted as the sole underwriter for the offering. Shares of Palatin (AMEX:PTN) closed at $2.03 Friday, down 2 cents.