Expecting an increase in research and development costs this year, Cardiome Pharma Corp. is raising $51 million in a public offering to continue its clinical programs for atrial fibrillation and congestive heart failure.
The Vancouver, British Columbia-based company priced its offering of 8.5 million common shares at $6 per share. If underwriters exercise their option to purchase an additional 1.3 million shares, Cardiome could end up with gross proceeds totaling $58.6 million.
Shares of Cardiome (NASDAQ:CRME) lost 28 cents Friday to close at $6.75. When contacted by BioWorld Today, the company declined to comment, citing SEC-imposed quiet-period rules.
Cardiome said in its prospectus it intended to use the proceeds to fund clinical development of RSD1235, both the intravenous and oral formulations, as well as oxypurinol, also in clinical trials. Funds also are expected to go toward other research and development programs, capital expenditures and general corporate purposes.
The company posted a net loss of $23.1 million for the year ended Dec. 31, and said it anticipates the losses to continue for the next two years due to late-stage trial and regulatory costs. Even though research and development costs more than doubled last year, growing from $14.1 million in 2003 to $32.1 million in 2004, Cardiome is expecting those expenditures to be even higher this year.
During 2005, the company said it plans to complete its second and third Phase III trials and begin working on a new drug application for the intravenous formulation of RSD1235, an anti-arrhythmic drug designed to selectively block ion channels in the heart that are known to be active during episodes of atrial fibrillation. Cardiome released results late last year of its first Phase III study, ACT 1 (Atrial Arrhythmia Conversion Trial), which met its primary endpoint and demonstrated safety and tolerability. Data showed that the drug converted 52 percent of patients with recent onset atrial fibrillation to normal heart rhythm, compared to 4 percent receiving placebo. (See BioWorld Today, Dec. 21, 2004.)
Deerfield, Ill.-based Fujisawa Healthcare Inc. licensed the North American rights to the intravenous formulation in 2003, and paid Cardiome a $6 million milestone fee following the positive ACT 1 results. Cardiome retains marketing rights outside of North America.
The ongoing ACT 2 trial is studying RSD1235 is patients who have developed transient atrial fibrillation following cardiac surgery, and ACT 3 is testing the drug in patients with recent onset atrial arrhythmia. Cardiome has said it expects to complete those two studies by the third quarter and could file an NDA by the end of this year or early next year.
Meanwhile, the oral extended-release formulation of RSD1235 is in Phase I development. The company expects to complete an additional Phase I study in Europe this year and initiate a Phase II proof-of-concept study in atrial fibrillation patients in both North America and Europe.
Cardiome holds all the marketing rights to the oral formulation of RSD1235. It also holds worldwide rights to its xanthine oxidase inhibitor, oxypurinol, for congestive heart failure. Oxypurinol has been tested in Phase II studies, and the company expects to release final results sometime this year.
As oxypurinol, acquired by Cardiome through its 2002 acquisition of New York-based Paralex Inc., has advanced from preclinical into clinical development, the costs steadily have increased. Cardiome reported that last year's research and development expenses for the drug were $7.1 million, up from $2.7 million in 2003.
Although the company received an FDA approvable letter in June for the use of oxypurinol to treat gout, the letter asked for additional clinical and manufacturing data, and Cardiome has stopped pursuing that indication in favor of advancing its cardiovascular products.
The recent public offering is expected to close around March 23. UBS Investment Bank and CIBC World Markets, both of New York, are acting as joint book-running managers. The syndicate of underwriters also includes Toronto-based firms GMP Securities Ltd., First Associates Investments Inc. and Orion Securities Inc., and Boston-based Leerink Swann & Co.