Preparing to broaden an ongoing Phase II trial into a larger pivotal study of its gene therapy treatment, TNFerade, in pancreatic cancer, GenVec Inc. entered a committed equity financing facility to access up to $30 million over the next three years.

Under the agreement, institutional investor Kingsbridge Capital Ltd. will allow GenVec to draw down funds in multiple tranches over a three-year period, in exchange for shares of common stock. GenVec will be responsible for determining when and how much capital it accesses.

It "provides us an available line of credit we can use if and when we need to," said Jeff Church, chief financial officer for the Gaithersburg, Md.-based company. "We knew when we expanded the study, our cash consumption would increase, and this way we can incrementally take a couple of million dollars off the shelf as we need it to fund our operations."

GenVec can access the $30 million in tranches of up to the lesser of $5 million or 1.75 percent of the company’s market capitalization, with Kingsbridge purchasing shares at discounts ranging from 8 percent to 12 percent. GenVec agreed to draw down a minimum of $2 million, but is not obligated to access the remaining funds.

The equity facility also does not preclude GenVec from raising money through other types of financings, such as public offering.

"If market conditions improve, and it’s beneficial for the company, then we’ll consider that," Church told BioWorld Today. "This just gives us some flexibility, and also answers the questions that some investors have" regarding how the company intends to pay for the expanded TNFerade trial, which is likely to cost in excess of $20 million.

The company, which also released its fourth-quarter and full-year earnings Wednesday, had about $32 million in cash and investments at the end of 2005. That included a $15.2 million public offering the company completed in September, selling a total of 7.6 million shares priced at $2 apiece. (See BioWorld Today, Sept. 28, 2005.)

For the quarter ending Dec. 31, GenVec posted a net loss of $4.1 million, or 6 cents per share. Full-year figures showed a net loss of $13.8 million, or 24 cents per share.

In its 2006 guidance, the company anticipated burning $20 million to $22 million for the year, with much of that being used to support the TNFerade trial.

The expanded Phase II/III study is expected to increase enrollment from 74 to 330 patients with locally advanced pancreatic cancer. Those patients will be randomized 2-to-1 to receive chemotherapy and radiation for a five-week period, either with or without TNFerade, an adenovector carrying the gene for tumor necrosis factor-alpha. Patients then will be given maintenance therapy - gemcitabine, either with or without Tarceva (erlotinib, Genentech Inc.) The primary endpoint will be survival at 12 months.

"We believe positive data from this trial could be used to support registration" of TNFerade for FDA approval, said Paul Fischer, GenVec’s president and CEO.

Data from a 50-patient dose-escalation trial demonstrated a dose-dependent response with TNFerade in tumor response and survival.

The company has not yet released a specific timetable for completing the expanded Phase II/III trial.

"Enrollment in these types of trials typically takes at least a year, and often they will go over that," Fischer said. "The best way to reduce that time is to increase the number of sites that are participating, and so we’re going to be actively opening more and more sites throughout the year."

The company also plans to look at partnering opportunities to reach the ex-U.S. market and to gain development funding and support for TNFerade in additional indications, such as rectal cancer, metastatic melanoma and esophageal cancer. GenVec has ongoing or completed Phase II studies in those indications.

GenVec’s gene-therapy pipeline also includes BioBypass in Phase II development to treat severe coronary artery disease. That product is administered with an injection catheter delivery device from Cordis Corp., a unit of New Brunswick, N.J.-based Johnson & Johnson. A third product, AdPEDF, is in an expanded Phase Ib trial in wet age-related macular degeneration.

The company also is working on vaccines using its adenovector delivery technology. It has an ongoing collaboration with the Vaccine Research Center to evaluate an HIV vaccine, and is working with the Naval Medical Research Center on a multi-antigen vaccine candidate for treating malaria.

As part of the equity facility agreement, GenVec issued a warrant to Kingsbridge for the purchase of up to 520,000 shares at an exercise price of $2.67 per share, a 25 percent premium to the stock’s average closing price five days prior to the agreement.

Shares of GenVec (NASDAQ:GNVC) closed at $2.19 Wednesday, up 9 cents.

In other financing news:

• BioXell SpA, of Milan, Italy, raised €10.5 million (US$12.6 million) in financing through an extension of its Series C round concluded in October 2004. To date, the company has brought in €73 million in private financing, and said the recent round will help pursue clinical development with its lead compound, BXL628. BioXell has an ongoing Phase IIb trial of the drug in benign prostatic hyperplasia, and BXL628 is being studied in two additional Phase IIa trials in overactive bladder ad non-bacterial chronic prostatitis. International life science investor TVM Capital led the financing, while BB Biotech, Index Ventures and Life Science Partners also participated. Hubert Birner, of TVM Capital, will join BioXell’s board.

• Cell Genesys Inc., of South San Francisco, entered a committed equity financing facility with institutional investor Kingsbridge Capital Ltd. to access up to $75 million in capital during the next three years in exchange for shares of Cell Genesys common stock. Under the terms, Cell Genesys can access capital in tranches of up to the lesser of $15 million or 2.5 percent of its market capitalization at the time of the drawdown, and Kingsbridge will purchase shares at discounts ranging from 6 percent to 10 percent. The company also issued a warrant to Kingsbridge to purchase up to 375,000 shares at an exercise price of $9.12, a 30 percent premium over the average closing price five days preceding the agreement. Shares of Cell Genesys (NASDAQ:CEGE) lost 5 cents Wednesday to close at $7.05.

• Helicos BioSciences Corp., of Cambridge, Mass., secured investments totaling $40 million from a syndicate of venture capital firms to support development of its true Single Molecule Sequencing (tSMS) technologies and techniques. TSMS enables researchers to rapidly and accurately sequence individual molecules of DNA and RNA. Investors in the round were Flagship Ventures, Atlas Ventures, Highland Capital, MPM Capital and Versant Ventures. That syndicate previously invested $27 million in Helicos in February 2004.

• Santaris Pharma A/S, of Copenhagen, Denmark, completed a €40 million (US$48.3 million) Series B investment round to fund continued development of its portfolio of drug candidates based on LNA, including SPC 2996, an RNA antagonist to Bcl-2 in a Phase I/II trial in chronic lymphocytic leukemia. Funds also will allow the company to start studies with other RNA antagonists and advance development of its platform for LNA-based therapeutics. The round was led by AGN AMRO Capital Life Sciences, of the Netherlands, with participation from Global Life Science Ventures, of Germany and Switzerland, Denmark-based Vaekstfonden, and French firm SPEF Venture. Martien van Osch, of ABM AMRO, and Holger Reithinger, of GLSV, will join the board.

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