BioCryst Pharmaceuticals Inc. raised about $23.9 million in a direct offering of common stock, providing it with funds to advance its lead cancer product, forodesine hydrochloride.

The Birmingham, Ala.-based company sold 4.35 million shares at $5.50 each to institutional investors.

"This certainly strengthens our cash position," said Michael Darwin, chief financial officer of BioCryst. "It almost doubles it. We've now got over $50 million in cash and a pretty active clinical program going forward in 2005."

The offering price was at a slight discount to BioCryst's closing stock price on Wednesday of $5.98. The stock (NASDAQ:BCRX) dropped 26 cents Thursday to close at $5.72.

With proceeds from the financing, the company has enough cash to take it forward at least two years. As of Sept. 30, BioCryst had about $34.1 million in cash, cash equivalents and securities.

The shares from Thursday's offering are being drawn down from a $60 million shelf registration statement declared effective by the SEC in January 2004. BioCryst raised $21.4 million in February 2004 in a financing that also drew down shares from that shelf registration. (See BioWorld Today, Feb. 18, 2004.)

Forodesine hydrochloride, formerly known as BCX-1777, is in a Phase IIa trial for T-cell malignancies, and in a Phase I trial for cutaneous T-cell lymphoma (CTCL). Early this year, BioCryst plans to start a Phase I/II trial of the product for B-cell acute lymphoblastic leukemia. It also hopes to move forodesine hydrochloride into a Phase IIb study for T-cell malignancies.

"We hope to meet with the FDA soon in designing the Phase IIb," Darwin told BioWorld Today, "and to initiate a special protocol assessment."

The FDA has designated forodesine hydrochloride an orphan drug for three indications: T-cell non-Hodgkin's lymphoma, including CTCL; chronic lymphocytic leukemia and related leukemias; and acute lymphoblastic leukemia.

Darwin said the company intends to retain the rights to forodesine hydrochloride, particularly in the U.S., since orphan indications represent small markets. But BioCryst primarily is a discovery and early development company that likely will out-license late-stage development and marketing rights for its other products.

The company's second compound, BCX-4208, is in a Phase I study of healthy volunteers. The goal is to start a Phase II study this year in patients with psoriasis.

"Both of our two lead compounds are called PNP inhibitors. They inhibit the enzyme PNP, or purine nucleoside phosphorylase," Darwin said. "So we feel that's a novel mechanism of action. What we've seen this far [with forodesine hydrochloride] is a pretty clean side effect profile. It's not a cytotoxic agent, like most chemotherapy agents. It's more cytostatic."

At the discovery stage, BioCryst is focused on other enzyme targets including tissue factor/Factor VIIa and hepatitis C polymerase. While BioCryst discovers some of its products, the two lead clinical-stage candidates came from Albert Einstein College of Medicine of Yeshiva University and New Zealand's Industrial Research Ltd. BioCryst licensed forodesine hydrochloride in June 2000, and gained rights to the BCX-4208 patent a few years later.

"We tend to license in enzyme targets and we use X-ray crystallography to enhance and further refine the process of drug development," Darwin said.

Founded in 1986, BioCryst went public in March 1994, raising $14.6 million.

Leerink, Swann & Co., of Boston, served as placement agent for Thursday's financing.

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