Only a few weeks after withdrawing one public offering due to market conditions, Nastech Pharmaceutical Company Inc. did a complete turnaround, pricing more than 1.7 million shares on Thursday to raise $23.3 million.

The Bothell, Wash.-based company chose not to move forward with an offering of 1.5 million shares the second week of August, when the stock was running at about $12.60.

"The prior withdrawal was because we didn't think the valuation numbers were right," said Steven Quay, chairman, president and CEO of Nastech. "Since that point in time, some of the investors we visited during that road show were very interested in the company. When the price parameters were what we thought they should be, we decided to pull the trigger quickly."

Nastech's stock (NASDAQ:NSTK) has climbed at least a dollar in the last few weeks. It rose 45 cents Thursday to close at $14.06.

The company priced this week's offering at $13.50 per share. All of the shares offered are being pulled from a shelf registration that became effective last October. The offering is expected to close Tuesday.

The price of $13.50 is the same price used during the sale of 4.25 million shares last December, when the company raised $57.4 million. (See BioWorld Today, Dec. 10, 2004.)

Needham & Co. LLC, of New York, is acting as sole book-running manager in the latest offering, while Atlanta-based SunTrust Robinson Humphrey and Seattle-based Delafield Hambrecht Inc. are acting as co-managers.

"It was oversubscribed," Quay said. "We had very high quality institutional investors increase their position, showing a great deal of support of the company."

Quay said the net proceeds will go toward Nastech's parathyroid hormone (PTH) nasal program in osteoporosis. Using its tight junction drug delivery technology, the company developed a nasal dosage form of PTH1-34, which is available as an injectable called Forteo (Eli Lilly and Co.). PTH1-34 is a peptide fragment (34 amino acids) of the naturally occurring human PTH that is a regulator of calcium and phosphorus metabolism. It has been shown to increase bone mineral density and significantly reduce fractures in postmenopausal women. Nastech has completed Phase I trials of the product, and it learned from the FDA in March that it could submit a Section 505(b)(2) application because the agency could rely on the safety and efficacy data of Forteo.

All Nastech needs to do is pull together preclinical toxicology results and some other data from pharmacokinetic and pivotal trials to bring the product to the market.

"The cost of that program and the manufacturing for it is about the amount of money that we raised in this offering," Quay told BioWorld Today.

Any leftover funds would go toward the company's RNAi clinical research and development programs, clinical development of its other product candidates, capital expenditures and working capital needs.

About 10 million people have osteoporosis in the U.S., and almost 34 million more have low bone mass. Aside from PTH1-34, Nastech has one other product to treat osteoporosis - calcitonin-salmon nasal spray, a generic partnered with Par Pharmaceutical Inc., of Spring Valley, N.Y., that is under review by the FDA.

Nastech also has completed three Phase I trials of PYY, a product for obesity. It has reported positive results from a Phase II trial of intranasal morphine gluconate to treat breakthrough cancer pain. PYY is partnered with Merck & Co. Inc., of Whitehouse Station, N.J., while morphine gluconate is not partnered.

Tight junctions are the foundation of Nastech's intranasal drug delivery platform. They are cell-to-cell connections in various tissues of the body, including epithelial and endothelial layers of the intranasal mucosa, the gastrointestinal tract and the blood-brain barrier. They function to provide barrier integrity and to regulate the transport and passage of molecules across those boundaries.

Following the offering, Nastech will have about 20.6 million shares outstanding.

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