As it nears completion of Phase III trials of Amoxicillin Pulsys, Advancis Pharmaceutical Corp. raised $27.25 million in a private placement.
The Germantown, Md.-based company intends to use proceeds to complete the trials and prepare for a potential commercial launch in 2006.
"It was just very significant to be able to complete the transaction in and of itself, because it's a very difficult market in the biotech sector currently," said Bob Bannon, the company's senior director of investor relations. "We think, hopefully, it speaks to the value of the company and our product candidates."
The company placed 6.8 million shares of common stock at $3.98 each, the closing price Monday. Advancis' stock (NASDAQ:AVNC) fell 11 cents Tuesday to close at $3.87.
Investors included Omega Fund, HealthCare Ventures, of Princeton, N.J., and Rho Ventures, of New York, as well as several new institutional investors. Upon closing, they will receive five-year warrants to purchase about 2.4 million shares of common stock at $4.78 per share. New York-based Lehman Brothers Inc. is acting as exclusive placement agent.
Following the private placement, Advancis will have about 29.6 million shares outstanding.
Founded in 2000, the company focuses on a platform technology called Pulsys, which was developed by its chairman, president and CEO, Edward Rudnic. Pulsys is a once-a-day pulsatile delivery technology invented to exploit a biological finding in which bacteria are killed more efficiently when exposed to antibiotics in front-loaded staccato bursts.
Advancis recently completed enrollment in two Phase III trials of Amoxicillin Pulsys for pharyngitis/tonsillitis. Results from the 510-patient adult trial and the 579-patient pediatric trial should be available this summer. If the results are positive, a new drug application would be filed later this year and the product could reach the market next year.
Bannon said proceeds from the private placement will take the company well into 2006, at which time it would conduct another financing.
"We always envisioned doing a more significant capital raise that would really support the launch of these products into the marketplace," he told BioWorld Today.
The first financing gives the company more flexibility as to when the second financing needs to be done.
In terms of drug development, the advantage to using Advancis' Pulsys technology with established drugs is the ability to skip over Phase II trials. In terms of patient convenience, the Amoxicillin Pulsys product is dosed once a day at 775 mg for seven days, compared with 500 mg three times a day over 10 days.
"If we're successful, doctors would be able to prescribe a once-a-day product that has less drug for seven days vs. 10 days," Bannon said.
The pediatric version comes in a sprinkle formulation that does not need to be refrigerated, as current liquid suspensions do. The product is a loose powder in packets and can be sprinkled on food.
Amoxicillin Pulsys is partnered with Par Pharmaceuticals Inc., of Spring Valley, N.J., which has paid for all of the Phase III development costs.
"We have agreed to jointly market and sell the product," Bannon said. "So we'll split the selling and marketing costs of the product, and then we will split the profits 50-50."
In 2004, there were about 55 million prescriptions written for Amoxicillin, making it about a $550 million market for a number of different indications. The pharyngitis/tonsillitis indication, for which Advancis would seek approval, accounts for about 25 percent of that market.
Bannon said Advancis plans to develop a pulsatile version of an antibiotic that would target ear infections in children, starting Phase I trials later this year. It also plans to conduct Phase I work this year on development of a Pulsys version of Keflex.
"We'd be looking to do pretty much the same thing that we did with Amoxicillin," Bannon said.
Advancis bought the rights to Keflex, a first-generation cephalosporin antibiotic, last summer. It is indicated for infections of the respiratory tract, skin and skin structure, bone and genitourinary tract. The company probably would not need to do Phase II trials of a Pulsys version of Keflex because, like Amoxicillin, it could use existing safety and efficacy data.