February thus far has been lucrative for Theravance Inc. and NeoRx Corp., two biotech companies that raised a combined total of almost $200 million this week.
Theravance secured a $131.1 million financing through a public offering of 4.6 million shares at $28.50 apiece, while NeoRx raised $65 million through a private placement.
Theravance's offering should close next week and includes an underwriters' overallotment option for an additional 600,000 shares, which could bring in another $17.1 million.
New York-based Merrill Lynch & Co. is acting as the lead manager, while New York-based HSBC Securities and Thomas Weisel Partners LLC, of San Francisco, are acting as co-managers.
According to the company's prospectus, Theravance intends to spend the proceeds on general corporate purposes, which might include funding clinical and preclinical development candidates, drug research activities, manufacturing of drug supplies, capital expenditures and working capital.
The South San Francisco-based company has five programs in development, two in late-stage trials: telavancin for serious Gram-positive infections in partnership with Tokyo-based Astellas Pharma Inc., and Beyond Advair in collaboration with London-based GlaxoSmithKline plc.
It partnered with Astellas just last November for telavancin in a deal worth $65 million up-front and up to $156 million in clinical and regulatory milestone payments. The product is in Phase III trials to treat complicated skin and skin-structure infections and hospital-acquired pneumonia. (See BioWorld Today, Nov. 9, 2005.)
The company entered its Beyond Advair collaboration with GSK in November 2002 and is focused on developing and commercializing long-acting beta2 agonist product candidates to treat asthma and chronic obstructive pulmonary disease. Five product candidates, potential new generation drugs to replace Advair, have either completed or are in Phase IIa trials. GSK reported $4 billion in sales for Advair for the first nine months of 2005.
Theravance also is working on preclinical and Phase I products for bacterial infections, respiratory conditions and gastrointestinal motility dysfunction.
Following the offering, the company will have 49.1 million shares outstanding. Its stock (NASDAQ:THRX) climbed 67 cents Thursday to close at $29.40.
NeoRx Funding Picoplatin With $65M
NeoRx Corp. is raising $65 million in a private placement with institutional and other accredited investors. The Seattle-based company entered a definitive agreement to issue 92.9 million shares of common stock at 70 cents each and five-year warrants for the purchase of 25.4 million additional shares at 77 cents each. Concurrently, it closed a $3.5 million bridge loan to fund operations until the financing closes following shareholder approval.
"This is a significant amount of capital," said Jerry McMahon, the company's chairman and CEO, "and most of that will be used to develop picoplatin, which is a product that we have currently in Phase II."
Picoplatin (NX 473) is a next-generation intravenous platinum chemotherapeutic agent designed to improve the safety and efficacy of existing platinum cancer therapeutics. It has demonstrated antitumor activity in a variety of solid tumors, including lung, ovarian and hormone-refractory prostate cancer. NeoRx acquired picoplatin in April 2004 from Vancouver, British Columbia-based AnorMed Inc., and holds an exclusive license in Europe and North America to develop, manufacture and commercialize the product. (See BioWorld Today, April 6, 2004.)
The company started a Phase II trial of the product for small-cell lung cancer last year and expects to start mid-stage trials in other undisclosed cancer types this year. Current worldwide sales for platinum therapeutics is more than $2 billion.
"The number and types of indications that we ultimately [receive approval for] will dictate what percent of that $2 billion market share we will enjoy," McMahon told BioWorld Today. "But we're very optimistic that we'll be able to take a substantial part of that."
The product already has been evaluated in about 500 patients and might offer an advantage over existing therapies by avoiding the platinum-resistance mechanism that causes patients to relapse quickly. It also exhibits "improved safety properties compared to current marketed platinums," McMahon said, which often are associated with kidney toxicities and peripheral neuropathies.
A smaller portion of the private placement proceeds will go toward paying off NeoRx's outstanding indebtedness to Texas State Bank, and for working capital and general corporate purposes. The company owes the bank about $3.9 million on a $6 million principal loan for a facility in Texas that once manufactured its Skeletal Targeted Radiotherapy (STR).
NeoRx dropped development of STR and shut down the manufacturing facility last May after facing development and regulatory challenges for the multiple myeloma candidate. It now is actively seeking to sell the facility. (See BioWorld Today, May 10, 2005.)
Aside from picoplatin, NeoRx is working with Scripps Florida in a research collaboration to find kinase inhibitors, capitalizing on McMahon's experience. He played a key role in the discovery and development of Sutent, a multi-tyrosine kinase inhibitor for which New York-based Pfizer Inc. gained FDA approval last week for gastrointestinal stromal tumors and advanced kidney cancer. McMahon is the former president of Sugen Inc., a company acquired by Pharmacia Corp. for $650 million, which was later taken over in 2002 by Pfizer for $60 billion.
The private placement and bridge loan financings include investments from San Francisco-based firms MPM Capital and Bay City Capital, and Deerfield Management Co., London-based Abingworth and T. Rowe Price, of Baltimore. Once they close, MPM Capital will own about 30 percent of NeoRx's stock and will fill one of two new director positions created in connection with the transaction. The second position will be filled by mutual agreement of MPM Capital and Bay City Capital.
"For us, this is a very substantial new beginning," McMahon said. "We're bringing in some really credible institutional investors in this transaction. They are top tier."
NeoRx's stock (NASDAQ:NERX) rose 3 cents on Thursday, to close at 84 cents.
In other financing news:
Hollis-Eden Pharmaceuticals Inc., of San Diego, expects to raise $26 million in gross proceeds through the sale of shares of its common stock and warrants to new and existing institutional investors pursuant to an existing shelf registration statement filed with the SEC. The company will sell 4 million shares at $6.50 each and will issue four-year warrants to purchase up to an additional 800,000 shares at $8.75 each. Rodman & Renshaw LLC acted as exclusive lead placement agent for the offering, and Canaccord Adams Inc. acted as exclusive co-placement agent. The company is developing a new class of investigational drugs known as immune-regulating hormones.
Somanta Inc., of Irvine, Calif., completed a reverse merger with Hibshman Optical Corp., a public company with no prior operating or stock trading history. Somanta, a specialty oncology company, will remain as the surviving corporation and will become a publicly traded entity, renamed Somanta Pharmaceutical Inc., on the Over-The-Counter Bulletin Board. The company raised about $5.9 million in gross proceeds through the sale of Series A convertible preferred stock to a group of institutional investors. SCO Securities LLC acted as exclusive placement agent. Proceeds will be used for the clinical development of its three lead preclinical candidates, including its lead drug Alchemix, a multi-target inhibitor that overcomes chemotherapeutic drug resistance by binding to DNA in tumor cells. The company expects to begin a Phase IIa trial in the fourth quarter.