Raising $62 million, Array BioPharma Inc. priced a public offering that will help the company move its lead product through Phase I testing.

The funds also will provide the Boulder, Colo.-based company with the leverage it needs to move additional preclinical candidates into human trials in 2005.

The company sold, at $7.75 apiece, a total of 8 million shares, which is 2 million more than it had set out to offer when the financing first was announced at the end of November.

"There was a significant demand from institutional investors for the offering," said Robert Conway, Array's CEO, "giving us the ability to take a little more money into the company and to satisfy some of the demand in the investment community."

Investors received the shares at a slight discount from Wednesday's closing stock price of $8.01. The stock (NASDAQ:ARRY) rose $2 on Thursday, or 10.2 percent, to close at $8.83.

The company could raise an additional $9.3 million if the underwriters exercise an overallotment option for up to 1.2 million shares of common stock. The offering is expected to close next week.

"The offering right now takes us to about $90 million in capital reserve in the company," Conway told BioWorld Today. "It's a significant step forward and a fairly big vote of confidence in the research that is going on at Array."

UBS Investment Bank, of New York, is acting as sole book-running manager, while Baltimore-based Legg Mason Wood Walker Inc., Minneapolis-based Piper Jaffray & Co., and San Francisco-based Thomas Weisel Partners LLC are acting as co-managers.

Array expects to receive net proceeds of about $58 million, not including the overallotment option. The proceeds will fund Array's drug programs, and provide money for working capital, capital expenditures and other general corporate purposes.

Array's lead drug candidate, ARRY-142886, is in Phase I testing for oncology indications. It is a mitogen-activated extracellular signal-regulated product licensed last year to London-based AstraZeneca plc in a deal worth more than $95 million. (See BioWorld Today, Dec. 19, 2003.)

Once the product completes Phase I testing next year, AstraZeneca will take over development. The product has shown preclinical efficacy in pancreatic, breast, colon, melanoma and head and neck cancers.

Aside from initiating a Phase I trial for ARRY-142886 this year, which triggered a $4 million payment from AstraZeneca, Array also has advanced four programs in preclinical development. Those include a dual inhibitor program of EGFR/ErbB-2, as well as ErbB-2 alone, for cancer, and p38 and MEK for inflammation. The company intends to move two of those programs into the clinic in 2005, and two others into the clinic in 2006.

"I would say the first thing that would go into the clinic would be our dual inhibitors for EGFR and ErbB-2," Conway said. "Then, the other three would move into the clinic, as well, over the next 18 months or two years."

Array also plans to advance several early stage programs into lead optimization in 2005.

In the past year, Array also entered a license and collaboration agreement with South San Francisco-based Genentech Inc. to advance two of Array's oncology programs into clinical development. Array received an up-front payment, research funding, and is entitled to development milestones and royalties on product sales. Specific financial terms were not disclosed. (See BioWorld Today, Jan. 7, 2004.)

Array went public in November 2000 and has 250 employees. While the company's recent strategy has been to partner its programs early, as was done in the agreements with AstraZeneca and Genentech, the $62 million public offering allows it to advance candidates through proof-of-concept studies before needing to do partnerships. Given Array's burn rate, the company has about four years of cash with the financing, Conway said.

"What this will do is allow us to own things much, much longer, and potentially take select indications ourselves to the market," he said.