Avanir Pharmaceuticals Inc. is raising $17.1 million in a common stock offering as it works to complete a rolling new drug application and Phase III trial for its lead product, Neurodex.
The San Diego-based company entered agreements to sell 7.7 million shares of Class A common stock to institutional investors at $2.20 per share. New York-based CIBC World Markets Corp. is acting as sole book-running placement agent, and Leerink Swann & Co. in Boston is acting as co-placement agent. The offering is expected to close today.
Shares of Avanir (AMEX:AVN) lost 3 cents Thursday to close at $2.37.
The financing "will help us get past the time point for the FDA decision on Neurodex," said Avanir President and CEO Gerald Yakatan. He estimated that the financing, plus existing cash, will sustain the company for "a little over a year."
As of Dec. 31, Avanir had about $22.6 million in cash, cash equivalents and short-term investments.
Net proceeds from the offering are expected to total about $15.8 million, which would be used for general corporate purposes, including the Phase III trial for Neurodex in neuropathic pain, along with research and development activities for other products in the pipeline. Part of the funds could also go toward pre-launch activities for Neurodex.
"We expect an FDA decision by the end of the year, provided that we meet our timeline of completing the rolling NDA by the end of June," Yakatan told BioWorld Today. Neurodex has priority-review status "because it's a first-in-class product."
Described as an orally administered combination of dextromethorphan and the enzyme inhibitor quinidine, Neurodex is being tested in several indications. The most advanced is pseudobulbar affect (PBA), a common symptom of patients with neurodegenerative diseases, characterized by pathological laughing or crying. Avanir said estimates indicate that about 50 percent of patients with amyotrophic lateral sclerosis report PBA, while about 10 percent of multiple sclerosis patients, 15 percent of Alzheimer's patients and 11 percent of patients one year after suffering a stroke reported emotional lability.
The company has completed two Phase III trials in pseudobulbar affect, in patients with amyotrophic lateral sclerosis and multiple sclerosis.
Avanir reached an agreement with the FDA in January through a special protocol assessment plan to begin a Phase III trial of Neurodex in diabetic neuropathy, a type of chronic neuropathic pain.
The company has been developing Neurodex since sublicensing rights in 2000 from IriSys Inc., of San Diego, a company founded by Yakatan. Last month, Avanir secured the remaining rights to the compound, agreeing to pay $1.9 million and to issue 2 million shares to IriSys. (See BioWorld Today, March 10, 2005.)
With worldwide rights, Avanir said it is interested in seeking partners for the product's sale and distribution in Japan and Europe, as well as looking for possible co-promotional opportunities in the U.S.
In addition to Neurodex, "all our other programs are moving forward," Yakatan said, "and we'll have quite a few things in the clinic as we go into 2006."
An asthma drug, AVP-13358, is in Phase I development, and the company expects to file investigational new drug applications this year to advance preclinical compounds, including an anti-inflammatory compound. Other development areas focus on atherosclerosis, cancer and infectious diseases.
Avanir has one marketed product: an over-the-counter 10 percent docosanol cream called Abreva to treat cold sores.