With plans to expand the scope of its existing development programs, Avigen Inc. is raising $21.2 million through a private placement to institutional investors.
The Alameda, Calif.-based company agreed to place about 3.9 million shares of its common stock priced at $5.37, with proceeds going toward "additional development opportunities beyond" what the company initially had planned, said Mike Coffee, chief business officer for Avigen, which ended the first quarter with a cash position of about $64 million.
That money is sufficient to support the company's development plan for two candidates in neurological indications and one in bleeding disorders. The $21 million is intended "to advance additional indications," Coffee said.
Altogether, its cash reserves are expected to sustain operations for the next two and a half to three years.
Avigen is pursuing AV650, an orally administered compound that's already marketed in Europe and Asia, in spasticity and neuromuscular spasms. The product has been tested in multiple clinical trials but never submitted for approval in the U.S.
Avigen in January licensed exclusive North American rights from SDI Diagnostics International Ltd., a division of Vienna, Austria-based Sanochemia, in exchange for an up-front payment of $3 million, milestones that could total more than $90 million and low double-digit royalties. (See BioWorld Today, Jan. 18, 2006.)
Avigen completed preclinical work on AV650, and expects to file an investigational new drug application by the end of the first half of 2006 and begin clinical testing before the end of the year.
The company also is hoping to file an IND for its second product this year, AV411, a small-molecule compound that has shown potential against neuropathic pain. The compound, which has been approved for years in Asia in a non-pain-related indication, has demonstrated in an animal model an ability to provide pain relief. Avigen is looking to expand AV411 into chemotherapy-induced neuropathic pain, and the company plans to start a Phase II proof-of-concept study outside of the U.S. before year's end.
Funds from the financing also will be used to advance AV513, Avigen's drug candidate for hemophilia, an indication that falls outside the company's core neurology focus.
"We affectionately call this our cute, redheaded stepchild," said Avigen CEO Kenneth Chahine, "because it's such a neat opportunity when you consider the possibility of having a therapy for hemophilia that changes the treatment paradigm from an intravenous multiweek injection to a pill that can be taken as a monotherapy or as a potential combination therapy."
The majority of hemophilia patients worldwide are not treated, so there's a need for a safe product that can be widely distributed, Chahine told BioWorld Today. "It was just too nice of an opportunity for us to pass up."
AV513 was developed by Avigen in house, but the company likely will look at partnering opportunities down the road. However, it plans to take AV650 and AV411 through late-stage development and into commercialization on its own.
The recent fund raising is the company's first since it shifted its focus from gene therapy to traditional drug development. In December, it sold its adeno-associated virus technology to Cambridge, Mass.-based Genzyme Corp. for $12 million in cash up front, plus milestones and royalties. (See BioWorld Today, April 6, 2005, and Dec. 22, 2005.)
The company reported a net loss of $8 million, or 38 cents per share, for the first quarter.
Its shares (NASDAQ:AVGN) closed at $5.80 Thursday, down 24 cents.