Zonagen Inc. publicly raised about $17.6 million, pricing 4.4 million shares at $4 each to accelerate two small-molecule candidates.

"The bulk of it will go to our clinical program," said Joseph Podolski, CEO and president of The Woodlands, Texas-based Zonagen.

As of Sept. 30, Zonagen had cash, cash equivalents and marketable securities of about $6.6 million. It estimated that the funding, added to available cash, would take the firm through 2005. The company's stock (NASDAQ:ZONA) rose 24 cents Thursday to close at $4.47.

The clinical program means Progenta, Zonagen's lead candidate in the clinic for uterine fibroids and endometriosis, and Androxal, in testosterone deficiency.

Licensed from the National Institutes of Health, in Bethesda, Md., Progenta is designed to alleviate symptoms associated with uterine fibroids and endometriosis by blocking the progesterone receptor. The treatment also might preclude surgery often necessary for patients.

Zonagen released preliminary data from the Progenta European Phase I/II uterine fibroid trial in November, demonstrating its ability to reduce fibroid size after one month of treatment compared to a standard treatment, Lupron (a gonadotropin-release hormone agonist from TAP Pharmaceuticals Inc.), as control. Dosing is complete and final 12-month exposure data are scheduled to be presented at a conference at the end of February.

The company has applied for a pre-investigational drug application meeting with the FDA in which Zonagen will "glean from them if they agree on the selected dose and what they would like to see in Phase III," Podolski said. Adjacent to the fibroid program, the company could initiate a 40-patient Phase II endometriosis trial in March.

Zonagen completed a Phase I/II trial for Androxal in the U.S. for the treatment of men with testosterone deficiency and has submitted final data to the FDA.

Zonagen's corporate story hinges on Vasomax, its once-lead product for erectile dysfunction. Concerned by the proliferation of brown fat in a rat study, the FDA in 1999 placed a clinical hold on the product, partnered with Schering-Plough Corp. The hold was never lifted and the partnership fell apart.

Then, in October 2002, Zonagen entered a merger agreement with Lavipharm Corp., of East Windsor, N.J. Both company's boards approved the stock-for-stock reverse merger. But in March 2003, Zonagen terminated the deal, which would have required relisting on the Nasdaq National Market under new guidelines, and could have caused delisting altogether.

Since then the company held a modified Dutch auction self-tender offer in January 2004, purchasing 57 percent of its then-outstanding stock for $2.10 a share for a total aggregate purchase amount of $14 million. Though it still holds the patents to Vasomax and Podolski suggested there might be an opportunity in men contraindicated with PDE5 inhibitors, he said Zonagen is not progressing the compound, adding that he "can't blame the FDA" for the drug's troubles.

"If I put myself in their place, I can see the dilemma," he said.

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