As it continues to advance its three products to the market or into clinical development, Halozyme Therapeutics Inc. is raising $13.9 million in a private placement of common stock and warrants.

San Diego-based Halozyme entered a definitive agreement with certain institutional and accredited investors for the placement.

"It's more than the company has ever raised," said Jonathan Lim, Halozyme's chairman and CEO. "It's the largest round of financing to date, and it ensures we have the necessary cash to execute our business plan well into 2006."

Halozyme will issue about 7.9 million shares of common stock at $1.75 per share in the private placement. It also will provide warrants to purchase up to 2.4 million additional shares of common stock at $2.25 per share. New York-based SG Cowen & Co. LLC is placement agent for the financing.

The financing is subject to customary closing conditions, but not shareholder approval.

Together, with the financing and the company's recent sales and marketing agreement with Baxter Healthcare Corp., the company said it is well capitalized as it moves forward. That agreement with Baxter revolves around Halozyme's drug-enhancement agent, Enhanze SC, for ophthalmology.

The company's most advanced product is Cumulase. In September, Halozyme submitted a 510 (k) filing for the medical device product for infertility. Halozyme hopes to launch Cumulase before the end of this year, Lim said.

"Our goal over the next three to five years is to penetrate about half of what we believe to be a $10 million market," Lim told BioWorld Today.

Enhanze SC is expected to be the subject of a new drug application filing in the first quarter of 2005. Halozyme is seeking approval of the product as a drug delivery agent of local anesthesia, contrast agents and for subcutaneous fluid replacement, also called hypodermocyclis. The product would tap into an annual ophthalmology market of $50 million in the U.S. and $100 million worldwide.

Halozyme entered its marketing deal with Deerfield, Ill.-based Baxter for Enhanze SC in August. Baxter gained exclusive rights to market, distribute and sell the product in the U.S. and Puerto Rico. The deal is a 50/50 profit-sharing arrangement. (See BioWorld Today, Aug. 17, 2004.)

The company has a third product, the therapeutic biologic Chemophase, for oncology indications.

"We plan to begin clinical trials for [Chemophase] in the third quarter of 2005," Lim said.

Halozyme's portfolio of products is based on intellectual property covering the family of human enzymes called hyaluronidases. In addition to advancing its products, the company plans to build value with its Enhanze technology.

"It's a technology-based platform that builds upon the drug delivery aspects of the enzyme," Lim said. "The idea is that this could be co-formulated with other subcutaneous and intramuscular drugs, which provides other partnership opportunities for the company."

Since its inception in 1998, the company has raised about $26 million through angel investments and a round conducted in January. That round also included an additional $15.9 million raised through the sale of warrants.

As of June 30, Halozyme had cash and cash equivalents of $5.9 million, and a net cash burn of $1.5 million in the second quarter.

The company's stock (OTC BB:HZYM) rose 11 cents on Wednesday to close at $2.05.

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