With its drug development costs climbing, Keryx Biopharmaceuticals Inc. is raising $82.8 million through a registered direct offering with two institutional investors.
The New York-based company expects to sell 4.5 million common shares at $18.40 apiece, a price equal to last Thursday’s closing value on the stock. The market reacted favorably to the financing, with shares in Keryx (NASDAQ:KERX) tacking on 53 cents Monday to close at $19.01.
"This signals us being opportunistic when the time is right to raise capital," said Ronald Renaud, the company’s chief financial officer, stressing that the influx of funding represents an opening to seize a more solid fiscal footing and should not spur between-the-lines speculation about any broader strategy at play. "From a balance sheet perspective," he told BioWorld Today, "we’re in a very strong position."
The funds supplement Keryx’s existing reserves, which stood at $100.7 million on Dec. 31. The company, which posted a $9.2 million net loss last quarter, had about 37.7 million shares outstanding at the end of the year. In the middle of 2005, the company raised about $75.8 million in net proceeds through a public stock offering with other institutional investors. (See BioWorld Today, July 18, 2005.)
Renaud said Keryx would burn through about $40 million this year, a slight increase over last year, as its clinical trial costs continue to mount.
The company’s lead product, Sulonex (sulodexide), is in a pivotal Phase III/IV program under a special protocol assessment agreement with the FDA to confirm its ability to reduce albumin levels in urine. An oral heparinoid drug for diabetic nephropathy, it was previously referred to as KRX-101. Enrollment into the Phase III portion of the study, which is recruiting 1,000 patients to test a 200-mg dose, is expected to close by the end of this year.
Follow-up and data collection will last through next year, and Renaud said the company hopes to get Sulonex to the market by 2008. Keryx owns North American rights to the drug.
Also moving forward is a Phase II study of Zerenex, a recently in-licensed phosphate binder that expands Keryx’s renal franchise. Data also are due this year. In addition, the company’s lead oncology compound, KRX-0401, is in a broad-based Phase II program to evaluate its use in solid tumors, multiple myeloma and leukemia.
The latest offering, for which there are no underwriting or placement agent fees, is expected to close today, subject to the satisfaction of customary conditions. Keryx, which did not identify the investors, entered the deal pursuant to a $150 million shelf registration filed at the end of last year.
In other financings news:
Metabasis Therapeutics Inc., of San Diego, said it obtained commitments to purchase about $40 million of its common stock in a registered direct offering. Terms of the transaction call for the company to sell about 4.9 million shares at $8.10 each to an undisclosed group of institutional investors. All the stock is being offered by Metabasis pursuant to a registration statement. Cowen & Co. LLC acted as the lead placement agent and Piper Jaffray & Co. acted as co-placement agent for the offering, which is expected to close March 30. On Monday, Metabasis’ stock (NASDAQ:MBRX) gained 14 cents to close at $9.10.
Idera Pharmaceuticals Inc., of Cambridge, Mass., raised $9.75 million in gross proceeds from a private stock and warrant placement with new institutional investors led by Baker Brothers Investments and including Tang Capital Partners LP and OrbiMed Advisors LLC. Idera also secured a commitment to purchase up to $9.75 million of common stock from Biotech Shares Ltd., an entity formed by several long-term Idera stockholders, supported by a letter of credit confirmed by JPMorgan Chase Bank NA. The company expects to use its proceeds to support the development of its Toll-like receptor-based drug candidates. Specific plans include funding for an ongoing Phase II trial of IMO-2055 in renal-cell cancer and an ongoing Phase I/II trial of IMO-2055 in combination with chemotherapy in solid tumors, as well as the preclinical development of a lead compound for infectious diseases, IMO-2125. On Monday, Idera’s stock (AMEX:IDP) gained 2 cents to close at 68 cents.
PanGenetics BV, of Utrecht, the Netherlands, raised 13 million in a Series B round of financing to continue clinical development of its human CD40 antagonist, PG102. The company, which said an earlier version of the antibody showed safety and signs of efficacy in an open-label clinical trial, plans to file an investigational new drug application for it in the first quarter of next year. PanGenetics also plans to in-license additional drug candidates and hire new senior management, a plan already under way with the appointment of Kevin Johnson as CEO. Previously, he was a board member and the chief technology officer at Cambridge Antibody Technology plc, of Cambridge, UK. The oversubscribed financing was led by ABN AMRO Capital, with participation from Credit Agricole Private Equity and previous investor Index Ventures. In addition, ABN AMRO’s Geert-Jan Mulder and Credit Agricole’s Philippe Guinot joined PanGenetics’ supervisory board.
Avantogen Ltd., of San Diego, raised A$5.7 million (US$4 million) through a non-renounceable rights issue. Eligible shareholders will be offered one new share for every four shares they hold as of April 6, at an issue price of A10.5 cents apiece. They also will receive one option for every two rights they take up. The option will be listed, have an exercise price of A25 cents and will expire at the end of 2007. The rights issue has been fully underwritten by BBY Ltd. for Avantogen, which was formerly known as Australian Cancer Technology and has three clinical-stage cancer products in its portfolio: Pentrys, RP101 and GPI-0100. The deal is to close in early May. The funds will be used to consummate its recently announced transactions with Hawaii Biotech Inc., of Honolulu, and Innovate Oncology Inc., of New York.
Amylin Pharmaceuticals Inc., of San Diego, filed a preliminary prospectus supplement to a shelf registration statement with the SEC relating to a proposed public offering of 8.5 million common shares. In addition, the underwriters will be granted a 1.3 million share overallotment option. Morgan Stanley & Co. Inc. is acting as the sole bookrunning and joint lead manager, with Goldman, Sachs & Co. as a non-bookrunning joint-lead manager. Co-managers include Bear, Stearns & Co. Inc. and Lehman Brothers Inc. All the shares are being sold by Amylin. On Monday, its stock (NASDAQ:AMLN) dropped $1.44 to close at $45.34.
CombinatoRx Inc., of Boston, closed its previously reported $48 million private placement of about 4.7 million common shares at $10.25 apiece. Participants included both new and existing investors in CombinatoRx, which now has more flexibility to move forward into larger clinical trials of its CRx-102 compound in osteoarthritis, while also providing the ability to advance earlier-stage assets into preclinical and clinical development. Cowen & Co. LLC served as the transaction’s exclusive placement agent, and Pacific Growth Equities LLC acted as financial adviser. On Monday, CombinatoRx’s shares (NASDAQ:CRXX) gained 8 cents to close at $11.06. (See BioWorld Today, March 24, 2006.)
Alexza Pharmaceuticals Inc., of Palo Alto, Calif., said underwriters of its initial public offering exercised in full their overallotment option to purchase an additional 825,000 shares of common stock, increasing the IPO’s gross proceeds to $50.6 million. Net proceeds are expected to total about $47 million and will fund ongoing research and clinical development activities for its four lead product candidates, all of which are based on the company’s Staccato technology and are designed to vaporize unformulated drug compounds into inhaled aerosol versions. (See BioWorld Today, March 9, 2006.)