Nutra Pharma Corp. entered a $9.6 million financing arrangement to fund ongoing work of its drug discovery subsidiary, ReceptoPharm Inc., which is developing products for treating neurological and autoimmune diseases.
The stock purchase agreement allows Boynton Beach, Fla.-based Nutra Pharma to draw down funds over the next 18 to 24 months from SBI Brightline XII LLC, an affiliate of Newport Beach, Calif.-based SBI, which agreed to purchase up to 24 million shares of Nutra Pharma's common stock. SBI also will be issued up to 6 million warrants, exercisable between 30 cents and 50 cents each, for $2.4 million. The transaction is expected to close during the fourth quarter.
"We believe this financing puts us on solid footing to complete our business plan," said Rik Deitsch, CEO of Nutra Pharma, which conducts business through its two holding companies, ReceptoPharm, of Plantation, Fla., and medical device company NanoLogix, of Sharon, Pa.
Funds will be used to satisfy the company's $240,000 obligation to ReceptoPharm stemming from its 2003 acquisition of ReceptoPharm, as well as to pay research and development costs for the two lead products in ReceptoPharm's pipeline, Deitsch told BioWorld Today.
The first drug, RPI-78M, is ready to begin a Phase IIb/III trial in adrenomyeloneuropathy, a neurologic disorder with a similar clinical pathology to multiple sclerosis. Deitsch said a study protocol has been approved for the Phase III study. RPI-78M also has completed in vitro work and microarray analysis in multiple sclerosis, and is in toxicology studies in that indication. Future studies could test the drug's efficacy in treating myasthenia gravis, muscular dystrophy and amyotrophic lateral sclerosis.
Both RPI-78M and the company's second product, RPI-MN, are chemically modified anticholinergic peptides designed to recognize the same nerve receptors as nicotine. But, unlike nicotine, which is toxic and addictive, ReceptoPharm's drugs have so far demonstrated the ability to attach safely to the acetycholine receptors. RPI-78M aims at preventing the activation of the receptor, while RPI-MN is designed as an antiretroviral to block viruses that attempt to use the receptor as an entry point to the cell.
RPI-MN has previously been studied in herpes, though Nutra Pharma's subsidiary will focus initially on HIV, Deitsch said.
"We're ready to enter Phase II trials with that product," he added.
Nutra Pharma was formed in 2001 to acquire and license drugs and technologies for treating neurological disorders, cancer and autoimmune and infectious diseases. The company purchased a majority holding in NanoLogix Inc. (formerly Infectech Inc.) in September 2003. NanoLogix develops diagnostic test kits to detect infectious diseases such as tuberculosis and Mycobacterium avium-intracellulare.
Prior to this financing arrangement, Nutra Pharma had raised about $4 million and had about 67 million shares outstanding. The company, which has not yet reported its second-quarter earnings, recorded a net loss of $673,424, or 1 cent per share, for the three months ending March 31. At that time, Nutra Pharma had about $18,377 in cash.
The company's shares (OTC BB: NPHC) gained 1 cent Friday to close at 31 cents.
In other financing news:
• IMI International Medical Innovations Inc., of Toronto, entered a bought-deal private placement to raise C$10 million (US$8.2 million), with the net proceeds going toward working capital purposes, including the development of the company's portfolio in cancer detection. IMI will issue units, comprised of a $1,000 principal amount 7 percent convertible debenture and 157 common warrants to a syndicate of underwriters led by Orion Securities Inc., of Toronto, and including Loewen Ondaatje McCutcheon Ltd., also of Toronto. The transaction is expected to close on or about Aug. 30.
• Ariad Pharmaceuticals Inc., of Cambridge, Mass., said underwriters exercised their overallotment option to purchase 1.125 million additional shares priced at $7.20 per share, resulting in gross proceeds to Ariad of $8.1 million. Those funds add to the $54 million raised through the previously announced public offering of 7.5 million shares. The company expects to use the proceeds for research and development, clinical trials, product manufacturing, intellectual property protection and working capital. New York-based firms Lehman Brothers Inc., Lazard Capital Markets LLC and SG Cowen & Co. LLC served as underwriters. (See BioWorld Today, Aug. 8, 2005.)
• Astralis Ltd., of Fairfield, N.J., completed a private placement of $2 million in common stock and warrants with Blue Cedar Ltd., at a closing price of 11 cents per share. A second closing of this round with additional investors is expected in September. Astralis said it intends to use the proceeds to support the return of its psoriasis product, Psoraxine, to the clinic. In March, the company reported that the drug missed its primary endpoint in a Phase II trial, and has since been working on a new formulation of the drug. In connection with the financing, investment banker Manuel Tarabay joined the board. (See BioWorld Today, March 15, 2005.)
• AMDL Inc., of Tustin, Calif., closed a private offering of shares and warrants, raising gross proceeds of $670,000. The offering consisted of the sale of an aggregate of 2.09 million shares of stock at 32 cents per share and three-year warrants for purchasing 1.25 million additional shares at 49 cents each. AMDL said proceeds will be used to fund the costs of regulatory approval for its products and for general working capital. The theranostics company develops products involved in the detection and treatment of cancer, and markets the DR-70 blood test.
• Quintiles Transnational Corp., of Research Triangle Park, N.C., said its newly formed subsidiary, Duloxetine Royalty Sub, intends to issue $150 million of Duloxetine secured notes, plus as much as $50 million to $150 million of additional notes, depending on market conditions. Quintiles expects to use the net proceeds to repay in full all outstanding term loans under its existing senior secured credit facility, and for any other debt arrangements and general corporate purposes. Payments of principal and interest on the notes will be made out of royalty and other payments, according to an agreement between Quintiles and Indianapolis-based Eli Lilly & Co., based on Lilly's U.S. sales of Cymbalta, a selective serotonin and norepinephrine reuptake inhibitor approved for the treatment of major depressive disorder and the management of diabetic peripheral neuropathic pain.