Preparing to begin additional Phase II trials of its lead drugs in advanced cancers, Ziopharm Oncology Inc. added $37 million through an oversubscribed private placement of stock and warrants.
The New York-based company reported today that it placed about 8 million shares of common stock, and 2.4 million warrants, priced at $4.63 each. That price was a slight discount to the stock's $5 closing price Monday. Shares (OTC BB:ZIOP) closed at $5.25 Wednesday, up 5 cents.
Proceeds are expected to carry the company into 2008, and "really enable us to continue to develop efficiently our current product candidates, as well as some newly identified ones," said Jonathan Lewis, Ziopharm's CEO.
The company's lead programs are in Phase I/II testing, and Lewis said he anticipates starting additional Phase II studies this year and "moving into pivotal trials by the end of next year."
ZIO-101, an organic arsenic molecule, is being evaluated in patients with advanced myeloma. That product emerged from a family of molecules licensed from the University of Texas M.D. Anderson Cancer Center and Texas A&M University.
As an organic molecule linked to arsenic, ZIO-101 is being developed to capitalize on the proven activity of inorganic arsenic, while allowing for higher dose administration and a significantly reduced risk of toxicity.
Ziopharm's second product, ZIO-201, is an isophosphoramide mustard-lysine in trials against advanced sarcoma. ZIO-201 was licensed from New Orleans-based DEKK-Tec Inc., and is designed to combine ifosfamide and cyclophosphamide, two existing drugs, into a formulation that has shown efficacy against cancer with less toxicity.
Behind its lead programs, Ziopharm is working on other products, such as a preclinical-stage organic arsenic compound that could be administered orally. The company has "no precise timeline" for that product, but is aiming to file an investigational new drug application within the next 12 months, Lewis said.
Ziopharm retains all rights to ZIO-101 and ZIO-201, and, though several companies have expressed an interest in partnering, "we're not ready to do that yet," Lewis told BioWorld Today.
"In fact, our plan right now is to take them all the way" to market in the initial indications of advanced myeloma and advanced sarcoma, both of which affect relatively small patient populations in the U.S., he added.
However, partnering likely will become an option "as we look to begin commercializing outside North America," Lewis said, "and as we begin to look outside of these particular cancers, [focusing] on much more common types that would require larger trials" and a bigger sales force.
In the meantime, Ziopharm plans to enlarge its pipeline by in-licensing additional compounds. Although he wouldn't go into details, Lewis said the company has one deal in the works that he expects to close by year's end.
Founded as a private company in early 2004, Ziopharm raised a total of $23 million - $5 million in seed financing followed by an $18 million Series A round last June - before going public via a reverse merger in September. The company merged with Englewood, Colo.-based EasyWeb Inc. to gain a listing on the Over-the-Counter Bulletin Board, and Lewis said he expects Ziopharm's stock to be included on a national listing in the next several months. (See BioWorld Today, June 6, 2005.)
At the time of its Series A financing, the company had nine employees. That number now has doubled, and a few more are expected to join before the end of the year, but it still relies on scientific expertise and experience and out-sources much of the work.
A number of new investors participated in Ziopharm's private placement, including ProQuest Investments, of Princeton, N.J.; LB I Group Inc., an affiliate of New York-based Lehman Brothers; Emerging Technology Partners, of Rockville, Md.; Knott Partners, of Syosset, N.Y.; Panacea Asset Management LLC, of New York; Cycad Group, of Carpinteria, Calif.; Henderson Global Investors, of London; and two funds (Medical Biohealth Trends and VCH Expert Biotech) advised by Medical Strategy, of Germany. Existing investors also participated.
Paramount BioCapital Inc, of New York, and Griffin Securities Inc., also of New York, served as co-placement agents. Granite Associates Inc. served as a selected dealer of each placement agent.
In other financing news:
• BioSyntech Inc., of Laval, Quebec, closed the third tranche of its previously announced financing, issuing 7.1 million units at 42 cents each for proceeds of nearly $3 million. That brings the total units issued to 50 million for total proceeds of $21 million. Each unit consists of one common share and half a warrant. Each full warrant entitles the holder to purchase one share at 65 cents prior to March 31, 2009. Proceeds will be used to complete clinical trials for BioSyntech's three lead products, as well as to begin construction of its commercial manufacturing facilities. Desjardins Securities Inc. and Dundee Securities Corp. acted as the agents for financing. Following the offering, the company has a total of 95.4 million shares outstanding.
• Dyadic International Inc., of Jupiter, Fla., received about $2.1 million in proceeds from the exercise of warrants to purchase an aggregate of about 495,000 shares of the company's stock priced at $3.33 each, warrants to purchase 50,000 shares at an exercise price of $5.50 per share, and stock options to purchase an aggregate of 47,417 shares at exercise prices ranging from $2.08 to $4.50 per share. The company also reported that its two largest shareholders increased their stock ownership through debt-for-equity conversions of convertible notes. The Emalfarb Trust owns about 5.8 million shares, representing about 24.3 percent, and the Francisco Trust owns 4.8 million shares, representing about 19.9 percent ownership. Dyadic develops, manufactures and sells biological products using its fungal strains to produce enzymes and other biomaterials.
• Labopharm Inc., of Laval, Quebec, completed its previously announced public offering of 12.7 million shares, including the full overallotment option, priced at $8 each for total estimated net proceeds to the company of $93.3 million. The company plans to use the funds to support the commercialization of its once-daily tramadol product, as well as advance development of existing and new product candidates within its pipeline, and for working capital and other general corporate expenses. (See BioWorld Today, May 1, 2006.)
• Qualyst Inc., of Research Triangle Park, N.C., closed its Series B round, bringing total funds raised through its Series A and Series B financings to $5.5 million. Special financial details relating to the Series B were not disclosed. Burton Advisors Ltd., of London, acted as the exclusive adviser and financial arranger. Qualyst commercializes ADMET products for drug discovery and development.