Months after losing part of a partnership, Memory Pharmaceuticals Corp. extended its runway through the end of next year by raising about $31 million in gross proceeds through a private stock and warrant placement.
The resources will fund the central nervous system-focused company's clinical, preclinical and exploratory research programs, and also be used for other working capital and general corporate purposes. As of June 30, Memory had about $25.2 million in cash, cash equivalents and marketable securities, and the company posted an $8.4 million net loss in the second quarter.
"I think this was an appropriate time to get additional funds in order to move our various programs forward," Jzaneen Lalani, Memory's vice president of legal affairs, told BioWorld Today.
In the private placement, which is expected to close today, Montvale, N.J.-based Memory is selling about 16.1 million newly issued common shares at $1.90 apiece to both new and existing institutional investors and other accredited buyers. Accompanying the stock will be warrants for the purchase of about 5.6 million additional shares exercisable at $2.22 each.
Its current clinical research efforts are centered on investigational drugs for Alzheimer's disease and schizophrenia, with two compounds in early studies: MEM 1003, an L-type calcium channel modulator for the former, and MEM 3454, a nicotinic alpha-7 agonist for the latter. Other areas of interest for the company include depression, vascular dementia, mild cognitive impairment, Parkinson's disease and memory impairments associated with aging.
Lalani noted that those "multiple compounds and multiple programs," proved important in attracting investor interest.
The deal's definitive agreement was announced just before Wednesday's market close, and the company's stock (NASDAQ:MEMY) dropped 3 cents to $1.83 by the time trading ended. Yesterday, the shares regained that amount to close at $1.85. Lalani said the per-share price in the offering was based on a standard formula.
After the financing closes, Memory will file a registration statement covering the resale of the stock issued in the placement, as well as the shares issuable upon the exercise of the warrants. As of June 30, the company had about 20.9 million shares outstanding.
Going forward, Lalani said Memory would work toward a number of milestones that have been etched into its calendar. The company by the end of this month expects to complete a safety and tolerability study for MEM 1003 and report those results, after which a Phase IIa trial is to begin.
Work also continues on MEM 3454, which is part of a broad nicotinic alpha-7 collaboration with F. Hoffmann-La Roche Ltd., of Basel, Switzerland, with Phase I expected to close shortly down the road. A Phase IIa trial is planned to begin in the first half of next year.
Also down the road, the company expects to make decisions on the future direction of two PDE4 inhibitors previously partnered with Roche: MEM 1414 and its backup, MEM 1917. MEM 1414 previously had been in Phase I.
In April, Roche said it would no longer fund development of the drugs on its own. That news dropped Memory's stock by one-third, but in the amended PDE4 collaboration signed last month, Memory regained all rights to those two compounds.
The agreement is continuing on other advanced leads, and Roche still has an option to get back into developing MEM 1414 and MEM 1917, though Memory is free to partner them elsewhere, as well. In the meantime, the company moves toward the data review of those drugs. (See BioWorld Today, Aug. 22, 2005.)
Still in preclinical development at Memory is a PDE10A program, from which it plans to name a drug candidate by the end of this year and seek a partnership.