West Coast Editor

Planning a Phase II trial with its lead drug candidate in the second half of next year, Chemokine Therapeutics Corp. priced its initial public offering, pulling down C$16 million (US$13.3 million) through the sale of 16 million shares at C$1 each.

Underwriters got an option exercisable for 60 days from closing to buy 2.4 million more shares to cover overallotments, which would bring total proceeds to C$18.4 million.

The company's stock (TSE:CTI) closed Thursday at C$1, unchanged.

David Karp, chief financial officer for Vancouver, British Columbia-based CTC, said the company could not comment because of SEC-imposed quiet-period rules.

The furthest-along compound, CTCE-9908, is an antagonist of chemokine stromal cell derived factor-1 called SDF-1, the naturally occurring chemokine that binds to the CXCR4 receptor on cancer cells and apparently causes them to metastasize.

A single-dose escalation trial that recently finished allowed CTC to measure the drug in healthy volunteers, and the multidose, escalation trial slated for the second half of 2005 will get a better bead on safety in non-small-cell lung cancer patients, while gaining some early ideas regarding efficacy, the company said in an filing related to the IPO.

The second lead drug candidate, CTCE-0214, is an agonist of chemokine SDF-1. By turning it on rather than off, the drug - in Phase I trials that started in the fourth quarter - might boost stem cells in the blood for transplant purposes, and could increase mature white blood cells and platelets for patients with chemotherapy-induced deficiencies.

Of the C$16 million, CTC will pay C$1.2 million in commissions and fees, plus another C$160,000 or so in remaining costs, for net proceeds of C$14.6 million. Factoring in the working-capital deficit of C$705,000 as of Nov. 30, the company is left with about $13.9 million in available funds.

CTC said it expects to use about C$3 million to cover Phase I trials with CTCE-0214, and about C$2.9 million for the Phase II trials with CTCE-9908. Another C$900,000 will cover the costs of preclinical work with a neovascularization candidate, CTCE-0324, and a multiple-sclerosis candidate, CTCE-189.

Founded in 1998, CTC listed total assets of C$749,112 on Sept. 30, with liabilities of about C$1.1 million. The company's net loss for the nine-month period was nearly C$2 million.

CTC does "not have enough cash resources to fund our operations for the next 12 months," and auditors have issued a "going-concern" opinion, which means the auditors have "substantial doubt that [CTC] can continue as an on-going business unless we obtain additional capital to fund future expenses," the company said in the filing.

Since its inception, CTC has raised about US$8.2 million, net of offering costs, from the sale of equity securities and has spent it all, officials reported.

A syndicate of investment dealers participated in the IPO, led by Canaccord Capital Corp., also of Vancouver, and including Jennings Capital Inc., of Calgary; Alberta, McFarlane Gordon Inc., of Toronto; and Wellington West Capital Inc., of Winnipeg, Manitoba.

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