As it prepares to launch a Phase III program with its lead product, AP23573, in advanced sarcomas, Ariad Pharmaceuticals Inc. is raising about $14 million in net proceeds for research and development activities.

The Cambridge, Mass.-based company agreed to sell about 3.1 million shares, with an option for underwriters to purchase an additional 466,942 shares. It has not yet disclosed a price for the shares, but the stock (NASDAQ:ARIA) closed Friday at $4.62.

If underwriters exercise the full overallotment option, Ariad expects net proceeds of about $16.1 million, with funds going primarily to research and development, as well as clinical trials, manufacturing, intellectual property protection, working capital and general corporate purposes.

"We believe this offering strengthens our balance sheet," said Ed Fitzgerald, senior vice president of finance and chief financial officer for Ariad, as the company continues "our efforts to partner ex-U.S. rights to our lead product" and to move toward a Phase III trial of AP23573.

A small-molecule mTOR inhibitor, AP23573, is designed to block the growth, cell division and angiogenesis, and has shown promising results in earlier cancer studies.

In June, Ariad presented data from a 212-patient Phase II study at the American Society of Clinical Oncology meeting in Atlanta showing that intravenously administered AP23573 more than doubled progression-free survival rates in patients with metastatic and/or unresectable soft-tissue and bone sarcomas when compared to control data from the European Organization for Research and Treatment of Cancer. (See BioWorld Today, June 7, 2006.)

For the upcoming Phase III study, Ariad plans to test an oral dosage of AP23572 in patients with advanced sarcomas, and that trial is expected to start by the end of this year, Fitzgerald told BioWorld Today.

AP23573 has been designated an orphan drug in both the U.S. and Europe for soft-tissue and bone sarcomas, and has received FDA fast-track designation in those indications.

The company also has an ongoing Phase Ib trial of AP23573 in patients with solid tumors, and is collaborating with medical device firm, Medinol Ltd., of Tel Aviv, Israel, to develop and commercialize stents and other devices for delivering the drug to prevent reblockage of injured vessels following stent-assisted angioplasty. That potential $40 million deal was signed in January 2005. (See BioWorld Today, Jan. 28, 2005.)

Ariad holds all rights to the small molecule, and plans to handle U.S. commercialization itself.

Beyond AP23573, the company has a preclinical pipeline of compounds targeting cell-signaling pathways, as well as other mTOR inhibitors targeting primary bone cancers and cancers that have metastasized to the bone.

Ariad, which has not yet posted its third-quarter earnings, reported a net loss of $17 million, or 27 cents per share for the three months ending June 30. That loss included expenses related to litigation with Indianapolis-based Eli Lilly and Co., in which Ariad is claiming that Lilly's Evista (raloxifene) and Xigris (drotrecogin alfa) infringe Ariad's patent covering methods of treating diseases by regulating NF-kappa B cell-signaling activity.

In May, jurors awarded damages to Ariad and its co-plaintiffs valued at about $65.2 million, though Lilly is appealing. Evista is a selective estrogen modulator for osteoporosis, and Xigris is indicated for septic shock. (See BioWorld Today, May 5, 2006.)

As of June 30, Ariad had cash, cash equivalents and marketable securities totaling $54.3 million. Following the offering, the company will have about 65.2 million shares outstanding. New York-based Credit Suisse Securities (USA) LLC is acting as the sole underwriter.

In other financings news:

• Chromos Molecular Systems Inc., of Burnaby, British Columbia, entered a bridge loan financing arrangement for $2 million with a syndicate including Pender NDI Life Sciences Inc., Pender Growth Fund Inc., NeuroDiscovery Limited Partnership and Rix Professional Medical Corp. Proceeds of the loan will be used to fund operations of Chromos as it seeks additional equity financing. The company has two drug development programs focused on inflammatory diseases and thrombotic disorders, and expects to file an investigational new drug application for its lead product, CHR-1103, a humanized monoclonal antibody for acute relapses associated with multiple sclerosis, in the second half of 2007.

• Encysive Pharmaceuticals Inc., of Houston, secured a commitment for up to $75 in a common stock equity financing from Azimuth Opportunity Ltd., which would allow Encysive, at its discretion, to sell shares to Azimuth over an 18-month period. Net proceeds from any stock sales would be used for general corporate purposes, including development and commercialization of company products. Encysive's programs focus on diseases of the vascular endothelium. Its lead program, Thelin (sitaxsentan) has received two FDA approvable letters in pulmonary arterial hypertension. Shares of Encysive (NASDAQ:ENCY) closed Friday at $5.04, down 15 cents. (See BioWorld Today, July 26, 2006.)

• Nastech Pharmaceutical Co. Inc., of Bothell, Wash., filed a shelf registration statement to issue, from time to time, up to an aggregate of $125 million. The company said it has no immediate plans to access capital, and terms of any future offering would be disclosed at the time of that offering. Proceeds would be used for general corporate purposes. Shares of Nastech (NASDAQ:NSTK) closed Friday at $16.60, down 36 cents.

• Ondine Biopharma Corp., of Vancouver, British Columbia, is raising C$10 million (US$8.9 million) in a bought deal agreement with a syndicate of underwriters led by Canaccord Capital Corp., and including Desjardins Securities Inc. and Pacific International Securities Inc. The syndicate will purchase 6.3 million shares of Ondine priced at C$1.60 per share, and underwriters will have an overallotment option for an additional 15 percent of the aggregate shares offered. Proceeds of the financing are intended to support further development of Periowave for chronic periodontitis in adults, and for general corporate purposes.

• Phylogica Ltd., of Perth, Australia, raised A$3.75 million (US$2.8 million) through a mix of placement to institutional and other investors and a share purchase plan. Shares were priced at A29 cents each, marking a 20 percent discount to the average weighted price of the past five days trading. Proceeds will be used to advance Phylogica's internal product candidates for stroke and burns treatment, as well as move forward with its collaboration agreements with Johnson & Johnson Research Pty. Ltd., of Sydney, Australia, and Opsona Therapeutics Ltd., of Dublin, Ireland. The transaction was managed and partially underwritten by Cygnet Capital.