BioWorld International Correspondent

PARIS - DrugAbuse Sciences SAS is offering 1.8 million new shares to new investors, plus 450,600 to management, in a private placement that is designed to raise €20 million (US$25.2 million) for the company and will result in a 40 percent float of its shares.

In tandem, the Paris-based company is seeking a listing on the Alternext market of the Euronext stock exchange in Paris following the share offering, which is scheduled to close June 28.

The shares are being offered at a unit price of €11.10, valuing the company at €45 million, which is 26 percent less than the enterprise valuation of €56.8 million produced by one of the firms handling the share placement, Bionest Partners, of Paris and New York. Bionest added that "a comparison to peers suggests a valuation of above €80 million."

After the share sale, existing shareholders will hold 50 percent of the equity and management will hold 10 percent. The three leading investors are CDC ECI, of Paris, with 36.4 percent; London-based 3i, with 11.8 percent; and Nomura International, with 9.4 percent. A year ago, the company raised a convertible bridge loan financing of €5 million, to which all its leading shareholders subscribed.

DrugAbuse Sciences is developing drugs for alcohol and drug addictions. Its lead product is Naltrexone Depot, a formulation of naltrexone that uses DAS' proprietary slow-release technology, LACTiz, and is administered by monthly intramuscular injection. DAS pointed out that the product has worldwide patent protection up to 2020. The drug is undergoing a Phase III trial in the U.S. for alcohol dependence, as well as a Phase II trial in heroine addition. A second Phase III trial is planned.

The additional funding will enable the company to complete the development of Naltrexone Depot, which it expects to launch in the U.S. in 2010 and in Europe in 2011 for alcohol addiction, and in 2012 for opiate addiction. DAS pointed out that a similar drug, Vivitrol, being co-marketed by Alkermes Inc., of Cambridge, Mass., and Cephalon Inc., of Frazer, Pa., received regulatory approval in April this year, but claims that its product has several advantages. Sales of Naltrexone Depot in alcohol addiction alone are forecast to reach €180 million in 2013 and €300 million to €500 million at their peak.

DAS plans to team up with a local partner for commercializing Naltrexone Depot in the U.S. It hopes to conclude a partnership agreement in 2009 from which it expects to reap an up-front payment of €50 million, followed by a €50 million milestone payment on FDA approval and a 50 percent profit share once the product is on the market.

The company plans to market Naltrexone Depot itself in Europe and other regions.

DAS has a second product in clinical development, DAS 431, a dopamine D1 receptor agonist in-licensed from Abbott Laboratories, of Abbott Park, Ill., in 2000. It is in Phase II trials for cocaine addiction and preclinical development for cognitive disorders. DAS thinks the product could reach the market in 2012 and that it has a peak sales potential of more than €100 million a year. The product has worldwide patent protection up to 2017.

Buprenorphine Depot, an opiate receptor agonist formulated for administration by monthly intramuscular injections, is in preclinical development, and DAS expects to initiate a Phase I trial in heroine dependence in 2007.

DAS generates no revenues and reported a net loss of €3.1 million in 2005. Its loss is forecast to jump to €9.1 million in 2007, due to a surge in research and development spending, but the company is expected to move to profitability in 2008, when it expects to earn its first revenues of €14.5 million and post a net gain of €1.1 million, mostly from milestone payments.

Milestones are expected to jump to €55 million in 2009 and €57.5 million in 2010, when the company's total revenues are forecast to reach €75.8 million thanks to its first sales of €18.3 million.

According to Bionest, the €20 million being raised through the private placement should see the company through to long-term profitability.

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