As its first product nears the market, Critical Therapeutics Inc. pulled in $54.5 million in a private placement that will help build an 80-person sales force to promote the asthma drug, Zyflo.
The financing also helps the Lexington, Mass.-based company advance its pipeline focused on inflammatory conditions.
"It strengthens our financial position and allows us to invest in the programs we have ongoing," said Frank Thomas, the company's chief financial officer. "In particular, we expect to launch a product later this year, Zyflo, which is positioned in the moderate to severe asthma market."
The company privately placed 9.9 million shares of common stock at $5.48 per share, as well as warrants to purchase about 3.5 million additional shares of common stock at $6.58 per share. The company's stock (NASDAQ:CRTX) rose 15 cents Tuesday to close at $5.58.
The financing includes participation from institutional and other accredited investors, including existing stockholders and affiliated entities, and is scheduled to close later this month.
Critical Therapeutics submitted a supplemental new drug application in April to reintroduce Zyflo Filmtab (zileuton tablets) to the market. The product is a 5-lipoxygenase inhibitor approved by the FDA in 1996 as an immediate-release, four-times-a-day tablet for the prevention and chronic treatment of asthma.
Abbott Laboratories, of Abbott Park, Ill., developed Zyflo but removed it from the market and dismantled the manufacturing facilities in late 2003. Critical Therapeutics licensed the product in 2004.
"I think one of the primary drivers behind Critical Therapeutics getting access to the product was that [Critical's CEO Paul Rubin] actually developed zileuton when he was at Abbott," Thomas said.
Abbott chose to remove the product due to high competition, a problem that Critical Therapeutics plans to address using a different strategy. Instead of targeting the primary care physicians that Abbott targeted, Critical Therapeutics' sales force will target allergists and pulmonologists - the doctors that see patients with moderate to severe asthma, those who typically receive the most benefit from the drug.
"These are patients that have tried but not responded to many of the other medications," Thomas told BioWorld Today. "It ends up being around 2 million to 3 million patients that we are going to be targeting."
Zyflo would represent the only oral medication available to patients that typically use inhaled steroids or beta agonists. The company expects to hear back from the FDA by the end of the year. Critical Therapeutics needed to file a supplemental NDA, even though the product already was approved, because the company has moved all manufacturing activities from Abbott's plants to third-party manufacturers.
The financing will help Critical Therapeutics build its sales force, which will promote Zyflo and could be used down the road for future in-licensed products. Critical Therapeutics also is developing an intravenous formulation of Zyflo to be used in a hospital setting.
As for the company's internally discovered products in inflammatory conditions, they likely will be partnered, Thomas said.
In the clinic, Critical Therapeutics is developing a small molecule, CTI-01, that may have anti-inflammatory characteristics in addition to antioxidant activity. A Phase II trial with 150 patients began in February to evaluate the compound's ability in preventing organ damage in patients undergoing major cardiac surgery involving the use of cardiopulmonary bypass.
At the preclinical setting, the company is evaluating mechanisms to prevent HMGB1 from playing a role in the inflammatory cascade, and it is studying the ability of acetylcholine in exerting anti-inflammatory activity by stimulating the nicotinic a7 cholinergic receptor. The HMGB1 program is partnered with MedImmune Inc., of Gaithersburg, Md. That agreement, formed in the summer of 2003, included $12.5 million up front and more than $120 million in potential milestone payments. (See BioWorld Today, Aug. 1, 2003.)
Founded in 2001, Critical Therapeutics went public in May 2004, and has raised $172 million since inception, including two private and two public financings. Following the private placement, the company has about 34 million shares outstanding. As of March 31, the company had $67.6 million in cash and short-term investments.
"Without this financing, we had adequate cash to take us through the middle of next year," Thomas said. "And obviously, with this financing, it takes us substantially beyond that."