Two months ago, when Anadys Pharmaceuticals Inc. signed what might be the largest Phase I deal in biotech history, the company's CEO said Anadys wouldn't need to do a financing for at least two years.
Nevertheless, the San Diego-based company priced 5 million shares at $12.40 each, to raise $62 million gross.
"We fully stand by the statement that we didn't need to do the financing," said Kleanthis Xanthopoulos, the company's president and CEO. But for corporate financing reasons, and to make the stock available to those who wanted it, he said, the time seemed right. Anadys also wanted to gain "financial flexibility," Xanthopoulos told BioWorld Today, "to allocate resources in some of the programs we have in late preclinical. We want to enhance their time to the clinic and their probability of success, as well as to explore new opportunities."
The financing follows a $20 million initial license payment made to Anadys by Novartis Pharma AG, of Basel, Switzerland, in a deal signed in June to advance ANA975 and other Toll-like receptor 7 oral prodrugs for chronic hepatitis C virus (HCV) and hepatitis B virus (HBV). Anadys could receive $550 million more in regulatory and commercial milestone payments. (See BioWorld Today, June 3, 2005.)
Credit Suisse First Boston LLC and SG Cowen & Co. LLC, both of New York, are acting as joint bookrunners for the offering, while Minneapolis-based Piper Jaffray and New York-based Needham & Co. LLC are acting as co-managers. The underwriters have an overallotment option to purchase an additional 750,000 shares of common stock, which could bring the company another $9.3 million.
The offering comes just a few days after Anadys released its second-quarter results showing $581,000 in revenues and a net loss of 69 cents per share. As of June 30, the company reported cash, cash equivalents and securities of $21.4 million, not including the $20 million payment received from Novartis.
Anadys focuses on Toll-like receptors (TLRs). Its preclinical compounds target TLR7, TLR8 and TLR9 for viral indications. The company also is investigating structural-based drug design and has a late discovery program targeting a viral enzyme.
"Each one of these technologies is going to bring a core compound to the clinic in the next 12 to 24 months," Xanthopoulos said.
TLRs are found in all vertebrate species and have developed over millions of years to regulate immune responses to bacterial, viral and fungal infections. Anadys is building a franchise in antivirals based on TLRs.
"Our desire is to be a very dominant player in this area," Xanthopoulos said.
The company's drug, ANA975, is an oral prodrug of isatoribine, a small-molecule TLR7 agonist. A Phase I trial began in January, and Anadys expects to start a 28-day study in HCV patients in the second half of this year. A Phase II could start in early 2006, with a new drug application filing slated for the end of 2007 or early in 2008. Analysts have said the worldwide market potential for ANA975 is $20 billion.
Another Anadys clinical product, ANA380, is a Phase II hepatitis B virus compound that is co-developed with LG Life Sciences Ltd., of Seoul, South Korea. Novartis holds an exclusive option to license Anadys' rights to the product.
Following the offering, Anadys has about 27.6 million shares outstanding, and plenty of cash for the future.
"On a pro-forma basis, the company will have more than $100 million in the bank between Novartis and this financing, so we're on very good financial ground," Xanthopoulos said, adding that the company burns about $30 million to $31 million a year.
Its stock (NASDAQ:ANDS) rose 69 cents Friday to close at $13.65.
In other financing news:
• Ariad Pharmaceuticals Inc., of Cambridge, Mass., pulled in $54 million through a public offering of 7.5 million shares priced at $7.20 apiece. Underwriters are New York firms Lehman Brothers Inc., Lazard Capital Markets LLC and SG Cowen & Co. LLC. They have an overallotment option for up to about 1.1 million additional shares that could bring Ariad another $8.1 million in proceeds.
According to the company's prospectus, it will use the money for research and development, clinical trials, product manufacturing, intellectual property protection and enforcement, and working capital and other general corporate purposes.
The company's lead cancer product, the mTOR inhibitor AP23573, is in multiple Phase II and Ib trials as a single agent in patients with hematologic malignancies and solid tumors. Early Phase II data in sarcoma patients that received the therapy showed that 37 percent of them demonstrated sustained antitumor responses for at least four months.
Behind AP23573, Ariad is developing a bone-targeted mTOR inhibitor and an oncogenic kinase inhibitor, both of which are in preclinical development.
Ariad last raised funds in March 2004, bringing in $37 million. (See BioWorld Today, March 25, 2004.)
The company's stock (NASDAQ:ARIA) dropped 18 cents Friday to close at $7.16.
• Kosan Biosciences Inc., of Hayward, Calif., plans to offer 4.5 million shares of common stock, plus up to an additional 675,000 shares through an overallotment option. Underwriters include Credit Suisse First Boston LLC, SG Cowen & Co. LLC and CIBC World Markets Corp., all of New York. Kosan develops cancer drugs, including KOS-862 (Epothione D), in Phase II trials, and 17-AAG, a heat-shock protein 90 inhibitor and geldanamycin analogue in Phase Ib studies. Based on Kosan's closing stock price of $9.65 on Thursday, an offering of 4.5 million shares would raise the company more than $43 million. The stock (NASDAQ:KOSN) dropped 6 cents Friday to close at $9.59.
• Nuvelo Inc., of Sunnyvale, Calif., entered a $75 million committed equity financing facility with private investment group Kingsbridge Capital Ltd. to support corporate and clinical development activities. The agreement allows Nuvelo to access capital at any time in exchange for newly issued shares of common stock during a three-year period. In April, the company began enrolling patients in a Phase III trial of alfimeprase to treat acute peripheral arterial occlusion. (See BioWorld Today, April 19, 2005.)
Nuvelo's stock (NASDAQ:NUVO) fell 48 cents Friday to close at $8.61.