Raising $10 million in a private placement, Alteon Inc. now has the funds necessary to advance its lead product, alagebrium chloride (formerly ALT-711), through Phase II trials.
The Parsippany, N.J.-based company agreed to sell about 9.5 million shares at $1.05 each to new and existing institutional investors for net proceeds of about $9.6 million.
"The proceeds will be used to support the ongoing clinical trials for alagebrium in systolic hypertension, diastolic heart failure and erectile dysfunction," said Kenneth Moch, Alteon's CEO and president, "and to continue to expand our pipeline by evaluating compounds in our library of what are called A.G.E. crosslink breakers and A.G.E. formation inhibitors."
The company's stock (AMEX:ALT) fell 14.1 percent, or 18 cents on Friday, to close at $1.10.
The financing is part of a shelf registration statement filed in June 2003 for $100 million in securities. Under the shelf, the company has previously sold 6 million shares to raise $10.7 million in October 2003, and another 11.2 million shares last June to raise $12.8 million in two tranches. (See BioWorld Today, June 29, 2004.)
"Obviously, the financing is very significant because it brings us well into the completion of these ongoing trials," Moch told BioWorld Today.
While the majority of the net proceeds will go to the Phase II trials of alagebrium chloride, any leftover funds will be used for general corporate purposes. Rodman & Renshaw LLC, of New York, served as placement agent for the financing.
Alteon is developing new classes of drugs with potential for reversing or slowing diseases of aging and the complication of diabetes. Advanced glycation end-products (A.G.E.s), when formed and cross-linked, can cause a loss of flexibility and function in body tissues, organs and vessels. Alteon has a library of compounds targeting the A.G.E. pathway.
Alagebrium chloride is the only A.G.E. crosslink breaker in advanced clinical trials. Alteon said the compound works by directly reversing the stiffening of the vasculature that leads to systolic hypertension and heart failure.
Ongoing trials include a Phase IIb systolic hypertension trial called Spectra (Systolic Pressure Efficacy and Safety Trial of Alagebrium), which began in March, and the Phase IIa heart failure trial called Pedestal (Patients with Impaired Ejection Fraction and Diastolic Dysfunction: Efficacy and Safety Trial of Alagebrium), which began in April. Alteon also is exploring the product in a Phase II trial for endothelial dysfunction at Johns Hopkins University School of Medicine under grants from the National Heart, Lung and Blood Institute and the Society of Geriatric Cardiology.
Moch said Alteon expects to complete enrollment in the Spectra trial during the first half of this year, and systolic hypertension data should be available in the second half.
"We will soon be starting up the trial in erectile dysfunction," he said. "Erectile dysfunction is a vascular disease and it fits with the model of how alagebrium works in remodeling the vasculature of the body."
In preclinical studies, alagebrium also has demonstrated benefits in kidney disease, atherosclerosis and other disorders.
More than 1,200 patients have been involved in the product's clinical trials to date. Moch expects to enter discussions with potential partners following the release of Phase IIb data. The company might decide to retain development and marketing rights for one or several indications in North America, while partnering the product in other territories.
The company's stock dropped 75 percent in 2003 when the compound, still called ALT-711 at the time, failed to show statistical significance in reducing systolic blood pressure by office-cuff measurement when compared to placebo at 210 mg daily, the highest of four doses. The Phase IIb trials were known as Sapphire and Silver. (See BioWorld Today, July 18, 2003.)
While the trials failed to hit the primary endpoint, researchers did see signs of efficacy and activity that were consistent with other trials and Alteon moved forward with additional Phase II studies.
Founded in October 1986, Alteon has about $20 million - or a little more than a year's worth of cash - following the financing. The company's burn rate is about $1.5 million a month, Moch said.