BioWorld International Correspondent

LONDON - Vernalis plc is raising £30.3 million (US$57.9 million) to set up a U.S. sales force for its migraine drug, frovatriptan, and ensure there is enough cash to last until mid-2007, when it expects to receive a $40 million milestone due for FDA approval of frovatriptan in the treatment of menstrually related migraine (MRM).

Simon Sturge, CEO, told BioWorld International: "We will increase cash burn and get comfortably through to early 2007. If we get MRM approval, in 2007-2008 our income will start to exceed the cash burn."

Reading, UK-based Vernalis is issuing 43.3 million shares priced at 70 pence per share in a placing and open offer. Existing shareholders are being offered five new shares for every 18 ordinary shares held. The new shares represent 27.8 percent of the existing share capital.

"The reception has been absolutely incredible, and we have raised substantially more than expected," Sturge said. The company was aiming for £20 million to £25 million and taking £30.3 million gross has left "significant unsatisfied demand."

That demand was perhaps evident in a 4 pence rise in the share price, to 78 pence, after the news was announced Feb. 24.

In June, Biogen Idec Inc., of Cambridge, Mass., licensed Vernalis' Parkinson's disease program, investing $6 million at the time and promising another $4 million equity investment if Vernalis raised money within the next 12 months.

Vernalis decided to go ahead, because the market's expectation of a fund raising was putting a brake on the share price.

The money enables Vernalis to exercise its option with Endo Pharmaceuticals Inc., of Chadds Ford, Pa., to set up its own sales force to co-promote frovatriptan in the U.S.

"Without the money, we couldn't have justified the expense of this U.S. infrastructure," Sturge said.

Endo will provide funding for, and assist in, establishing, a 25-person team that will be trained by January. While Vernalis will not receive any incremental income from extra frovatriptan sales (other than royalties), it will be able to use the sales team to promote other products.

"The Catch-22 is always that you can't in-license products until you have a sales force, and you can't afford a sales force until you have products," Sturge said. Vernalis is looking for specialist neurology products to in-license or acquire.

Recruitment for the final Phase III trial needed to complete the data package for filing frovatriptan in the treatment of MRM began in October, and Sturge said it is proceeding on schedule.