As the FDA reviews two of its drug candidates for approval, Depomed Inc. is raising $22.7 million in a registered direct offering to private investors.
The Menlo Park-based company offered up to 5 million shares of its common stock to institutional investors at $4.50 per share. San Francisco-based Thomas Weisel Partners LLC is acting as the exclusive placement agent.
Following Fridays' announcement, Depomed's shares (NASDAQ: DEPO) fell 61 cents, to close at $4.72.
In the prospectus supplement to the company's existing shelf registration, Depomed said, if all shares are sold, the estimated proceeds would be $21.1 million, which is expected to fund upcoming clinical trials, regulatory submissions, research and development expenses, internal marketing and sales and general administration and working capital needs.
Sylvia Wheeler, Depomed spokeswoman, told BioWorld Today the company was not able to comment due to SEC-imposed quiet-period rules.
For the quarter ended Sept. 30, Depomed reported a net loss of $6.7 million, or 19 cents per share. The company's cash and short-term investments totaled $23 million and it had 34.6 million shares outstanding.
Using its oral delivery technology, the Gastric Retention System, Depomed has taken a number of marketed immediate-release products and created an extended-release formulation. By retaining medications in the stomach for an extended period, the company said, the GR system is intended to cut down on dosing requirements and reduce side effects related to gastric absorption.
Last year, the company filed two new drug applications with the FDA, for Glumetza and Proquin XR, both of which are under review.
Glumetza is a once-daily, extended-release version of metformin, a drug to treat Type II diabetes. Many diabetics take Glucophage, an immediate-release version of the drug sold by Bristol-Myers Squibb Co., of New York, or generic forms, that require two or three doses per day.
Depomed previously announced a partnership with Toronto-based Biovail Corp., giving Biovail exclusive rights to market Glumetza in the U.S. Under the agreement, Biovail will provide $25 million to Depomed upon FDA approval and pay royalties on net sales.
The company said it expects to hear from the FDA on Glumetza during the first half of the year.
In November, Depomed signed an agreement with LG Life Sciences of Seoul, South Korea, to commercialize and market Glumetza under the name Metformin GR in the Republic of Korea for a $600,000 up-front license fee and milestone fee upon approval.
Depomed said it expects an FDA decision on Proquin XR in the last half of this year. The product is a once-daily extended-release formulation of the antibiotic ciproflaxocin to treat urinary tract infections. The company reported that patients receiving Proquin XR in trials showed fewer side effects and fewer gastrointestinal disorders than patients treated with twice-daily doses of Cipro, an immediate-release antibiotic manufactured by Bayer AG, of Leverkusen, Germany. (See BioWorld Today, July 21, 2004.)
Depomed said it is seeking partners to market Proquin XR.
The company plans to extend its Phase II trials evaluating Furosemide GR, a controlled-release formulation of the diuretic furosemide, currently sold as Lasix by Aventis SA, of Strasbourg, France. Furosemide is used to treat edema in patients with congestive heart failure, hypertension, cirrhosis of the liver and renal disease.
In September, Depomed reported preliminary results from its 30-patient Phase II trial of Furosemide GR, a controlled-release formulation of the diuretic furosemide. The company said patients experienced comparable excretion of urine and electrolytes in both treatment groups.
Phase II trials for Depomed's Gabapentin GR are set to begin sometime this quarter. Gabapentin, marketed by New York-based Pfizer Inc. as Neurontin, treats epileptic seizures and postherpetic pain.
Depomed also has completed preclinical studies for a combination product of Metformin GR and sulfonylurea, designed to treat Type II diabetes.