Two months after Favrille Inc. completed enrollment in a pivotal Phase III trial of its B-cell non-Hodgkin’s lymphoma drug FavId, the company is raising $45 million in a private placement.
"This is an important financing for us because it provides us with sufficient capital to ensure that we can get to the end of 2007," said John Longenecker, president and CEO of San Diego-based Favrille. "And we have two key events between now and then."
The first is the analysis in the fourth quarter of response improvement among patients in the Phase III trial. Although it is a secondary endpoint, it may provide sufficient data for Favrille to file for accelerated approval. The second event should occur sometime in the second half of 2007, when the company will analyze the time-to-disease progression primary endpoint.
Favrille is raising the $45 million through the sale of 8.6 million shares of common stock at $5.26 each, and the issuance of warrants to purchase 3 million shares at the same price. At closing, investors will pay an additional purchase price equal to 12.5 cents for each share underlying the warrants. In addition to FavId, proceeds will go toward working capital and general corporate purposes.
MPM BioEquities Advisor LLC, of Boston, is leading the private placement, which also includes investments from Federated Kaufmann Fund, of Pittsburgh; T. Rowe Price Associates, of Baltimore; Tang Capital Management, of New York; ProMed Management, of New York; Forward Ventures, of San Diego; Sanderling Ventures, of San Mateo, Calif.; Alloy Ventures, of Palo Alto, Calif.; and William Blair Capital Partners, of Chicago.
"We are very pleased to bring in the quality institutions that came into this round," said Tamara Seymour, Favrille’s chief financial officer and vice president of finance and administration, who added that with existing cash the private placement proceeds will carry the company "at least through the second half of 2007."
As of Dec. 31, the company had cash, cash equivalents and short-term investments of $34.5 million.
Favrille began its Phase III trial - a randomized, double-blind, placebo-controlled study - in July 2004 under a special protocol assessment from the FDA. It was designed to enroll 342 subjects and to evaluate FavId following Rituxan, the current standard of care for which South San Francisco-based Genentech Inc. posted 2005 sales of $1.8 billion.
Phase II data presented in December at the 47th annual meeting of the American Society of Hematology in Atlanta showed that FavId, when administered following Rituxan, indicated an improved response over Rituxan alone. The overall clinical response rate increased from 49 percent at month three following Rituxan alone to 65 percent following the initiation of FavId.
FavId enables a patient’s immune system to recognize a cancerous tumor and to develop "an active immune response against the tumor," Longenecker said. "This is a new mechanism of action that hasn’t been commercialized previously, and we think that it’s a terrific complement" to therapies like Rituxan.
The FDA has granted Favrille fast-track designation for the drug.
The company also has prepared for the commercial launch of FavId by signing an amended lease agreement to expand to 80,000 square feet its existing facility for commercial-scale manufacturing. The size, it said, will be sufficient to supply FavId for up to 4,000 patients per year. In addition, Favrille appointed David Guy in December chief commercial officer.
"What our strategy has been is to retain commercial rights to FavId, at least in the U.S., until we have the [biologics license application]," Seymour said. "And at that point, we would decide whether we want to partner or market it ourselves."
The market is concentrated among a limited number of hematology oncologists that could be reached with a small sales force, she added. Favrille intends to partner FavId outside the U.S.
FavId is an active immunotherapy based upon unique genetic information extracted from a patient’s tumor. In addition to the Phase III trial in follicular B-cell NHL, it also is being studied in Phase II trials in other B-cell NHL indications.
Favrille’s other clinical pipeline product, FAV-201, is expected to enter a Phase I/II trial in the first half of this year for T-cell lymphoma.
"It’s a much smaller part of the lymphoma market," Seymour said, "but it’s a very big unmet medical need."
Founded in 2000, Favrille raised $42 million in a February 2005 initial public offering. In total, it has raised $164 million since inception.
The stock (NASDAQ:FVRL) rose 4 cents Tuesday to close at $5.30.
In other financing news:
• Advanced Magnetics Inc., of Cambridge, Mass., priced an offering of 1.2 million shares resulting in net proceeds of $31.7 million. ThinkEquity Partners LLC is acting as the sole book runner for the offering. Proceeds will be used to fund clinical development programs, including that of ferumoxytol as an iron-replacement therapeutic, and for general working capital purposes.
• Genta Inc., of Berkeley Heights, N.J., entered a definitive agreement to sell 19 million shares through a registered direct offering to raise $40.8 million. Cowen & Co. LLC is serving as lead placement agent, while Rodman & Renshaw LLC is serving as co-placement agent. Genta is focused on two major programs: Genasense (oblimersen sodium) Injection, for which a new drug application has been submitted for its use with fludarabine and cyclophosphamide to treat patients with relapsed or refractory chronic lymphocytic leukemia; and Ganite (gallium nitrate injection), which the company is marketing in the U.S. to treat patients with cancer-related hypercalcemia that is resistant to hydration.
• RegeneRx Biopharmaceuticals Inc., of Bethesda, Md., obtained commitments to purchase common stock in a $7.3 million registered direct offering at $2.81 per share. Participants in the financing included several new institutional investors, and affiliates of Sigma-Tau Group. Investors also were issued warrants to buy 907,182 shares of common stock at $4.06 each. RBC Capital Markets Corp. acted as sole placement agent for the transaction. RegeneRx is developing TB4, a 43 amino acid peptide, and is sponsoring three Phase II chronic dermal wound healing clinical trials.