Capitalizing on its rising stock price driven by avian flu fears, Novavax Inc. is bringing in $18 million through a public offering to support clinical development.

The Malvern, Pa.-based company agreed to sell about 4.2 million shares of common stock at $4.30 per share, far above the closing price of $1.76 per share only a month ago. Novavax's stock has risen steadily since late August, starting with a 30 percent jump on news that the H9N2 avian flu vaccine developed using its Virus-Like Particle (VLP) technology performed well in preclinical models, effectively protecting animals that were challenged with the live virus. A month later, its shares climbed again when Novavax signed a deal for Somerset, N.J.-based Wave Biotech LLC to make commercial-scale supplies for its vaccines, starting with production of its H5N1 avian flu vaccine. (See BioWorld Today, Aug. 26, 2005.)

"It's ended up being one of the most active stocks on the Nasdaq over the last few weeks," said analyst Ken Trbovich, of New York-based RBC Capital Markets, adding that the increase is based on the expectation that the company "could participate in the effort to develop an avian flu vaccine."

In the past, Novavax's efforts have fallen short of commercialization. But, during the last few months the company named a new CEO, Rahul Singhvi, and narrowed its focus to the area of pandemic flu. To that end, the company out-licensed rights in October to its approved menopause drug, Estrasorb (estradiol topical emulsion) to Esprit Pharma, of East Brunswick, N.J. for $12.5 million, which included an up-front payment of $2 million and $8 million paid before the end of the year. That transaction marked the company's turning point, Trbovich said.

"If you look at the summer months, when the stock was below a dollar, the company had only about six months worth of cash," he told BioWorld Today. But, between the deal with Esprit and the recent financing, "that's not the case anymore.

"This funding today will help them move forward on their own," Trbovich added. "The question then will be, will they be able to get far enough to attract outside funding - either a government contract or a commercial partnership - at a later date?"

The potential threat of an avian flu pandemic continues to grab headlines - not to mention funding - as federal officials call for improved vaccine production. On Tuesday, President Bush asked Congress to pass a $7.1 billion plan, including $1.2 billion for the government to purchase enough vaccine against the avian flu strain. (See BioWorld Today Nov. 2, 2005.)

Up to now, Novavax's stock has been influenced by the "ebb and flow of the news," Trbovich said, something that "is very hard to ignore from an investment perspective."

But the company has yet to disclose a timeline for the clinical development of its avian flu product, which so far had been tested only in preclinical models, and from there, questions of the product's efficacy and production efficiency will come into play. Novavax did not return calls Wednesday.

Novavax also will have to contend with a number of other companies working in the avian flu field, some of which are farther ahead in development. One competitor, vaccine-maker Chiron Corp., of Emeryville, Calif., already was awarded a $62.5 million government contract to supply an H5N1 avian flu vaccine to the stockpile. (See BioWorld Today, Oct. 31, 2005.)

How long the avian flu will stay a global health concern also remains to be seen. Will it go the way of earlier threats such as anthrax, which saw a large interest spike after the Sept. 11, 2001, terrorist attacks? Or is it similar to severe acute respiratory syndrome, which was once the most feared pandemic in the land but appears to have been driven back underground?

"The traditional flu season runs from October to March, so one concern is that once that season is over, the news cycle, which has been so important to Novavax's stock, is also over," Trbovich said.

The imminent threat of avian flu also could soften if governments succeed in producing adequate quantities of the vaccine on short notice, he added. "And if that's the case, the question is, who will be part of it? Will Novavax be part of it?

"Right now, it's just too early to tell."

Novavax is expected to provide further details on its vaccine plan when it releases third-quarter earnings later this month.

The company posted a net loss of $5.7 million, or 14 cents per share, for the second quarter of 2005. As of June 30, it had cash and cash equivalents totaling $4.4 million, though the company completed a $4 million equity offering at the beginning of the third quarter.

Its stock (NASDAQ:NVAX) closed at $3.99 Wednesday, down 56 cents.

New York-based Rodman & Renshaw LLC is acting as exclusive placement agent for the public offering.

In addition to work on its avian flu vaccines, the company also intends to use proceeds to support work on its seasonal flu vaccines, develop its internal research programs and technologies, invest in research and development facilities that are in compliance with GMP regulations, and for general corporate purposes.

In other financing news:

• Durect Corp., of Cupertino, Calif., priced its public offering of 7.4 million shares of common stock at $5 per share, to raise $37 million. Of those shares, 32,256 are being offered by certain selling stockholders. The company granted underwriters a 30-day option to purchase an additional 815,530 shares to cover any overallotments. Net proceeds from the offering will be used for general corporate purposes, including clinical trials, research and development activities, capital expenditures, facilities expansion and to meet working capital needs. Morgan Stanley & Co. Inc. and JP Morgan Securities Inc., both of New York, are acting as lead underwriters. CIBC World Markets Corp. and WR Hambrecht & Co., also of New York, are acting as additional underwriters. The company expects to complete the stock sale on or about Nov. 7. Shares of Durect (NASDAQ:DRRX) closed at $5.14 Wednesday, down 81 cents.

• Nymox Pharmaceutical Corp., of Hasbrouck Heights, N.J., secured commitments for $13 million in private equity financing. The placement of common stock is with institutional investors, and is priced at a 3 percent discount to the market price. Proceeds will be used for general corporate purposes. Nymox develops therapeutics and diagnostics, and its pipeline includes NX-1207, a Phase II drug for benign prostatic hyperplasia, as well as other drugs to treat E. coli infection, Alzheimer's disease, oncology and infectious diseases. Shares of Nymox (NASDAQ:NYMX) closed at $1.97 Wednesday, down 19 cents.

• OncoMethylome Sciences SA, of Liege, Belgium, closed a 15 million (US$18.1 million) Series B financing round led by Edmond de Rothschild Investment Partners, of Paris. Proceeds will be used to accelerate the development of the company's diagnostic and pharmacogenomic solutions for early detection and individualized treatment of cancer. To date, Oncomethylome has raised about 29.2 million. Existing investors ING Belgium; Amsterdam-based Life Sciences Partners; Munich, Germany-based PolyTechnos Venture-Partners; Liege, Belgium-based firms Meusinvest and Technowal also participated in the round. Raphael Wisniewski, of Edmond de Rothschild, joined the company's board.