Completing one of its larger financings in recent years, Viragen Inc. added $20 million to its coffers on Tuesday as it prepares to partner Multiferon and to advance the research and development of its other products.
The company raised the funds through the sale of convertible promissory notes and common stock purchase warrants to eight institutional investors. Proceeds will be used to progress the research, development and commercialization of its products and technologies.
Viragen entered into the purchase agreements in March. The company's stockholders approved the sale about two weeks ago when they also approved a reverse stock split at a ratio of 1-for-10.
"Completing this $20 million financing agreement greatly improves our balance sheet and gives us the strength and flexibility to execute our business plan," said Douglas Calder, the company's director of communications. "Among our immediate priorities is to enhance and broaden our international marketing activities in order to increase sales of Multiferon."
The Plantation, Fla.-based company has had hard times, reporting only about $32,000 in cash at the end of 2002 and three years of consecutive annual losses in excess of $11 million. It set in motion a plan to reduce the burn rate by up to 40 percent and to lay off an undisclosed number of its 70 employees. Several members of the management team and board agreed to full or partial compensation in the form of stock options.
Viragen managed to raise $2.1 million in January of 2003, then another $12 million in credit a few months later, and a $5.5 million debt financing last June. (See BioWorld Today, April 2, 2003.)
"This [latest] financing takes us to approximately $25 million cash on hand," Calder told BioWorld Today. "We certainly needed it. There's no question about it."
Multiferon is approved in nine countries for the treatment of various viral and malignant diseases. The company's other products, all in preclinical development, include an anti-CD55 antibody for cancer indications in collaboration with Cancer Research UK and the University of Nottingham; an R24 antibody in collaboration with Memorial Sloan-Kettering Cancer Center for certain cancer applications; and an IEP 11 peptide in collaboration with the University of Miami and its Sylvester Cancer Center to inhibit tumor growth in a range of cancers. Viragen also is working with Scotland's Roslin Institute to use its Avian Transgenic Biomanufacturing platform to produce therapeutic proteins, such as monoclonal antibodies, in the eggs of transgenic chickens.
Multiferon is a purified, multi-subtype, natural human alpha-interferon. In Sweden, it has broad approval for any disease in which a patient fails first-line recombinant interferon therapy. In other countries, it is approved as a second-line treatment for hairy-cell leukemia and chronic myelogenous leukemia. Viragen reported product sales of $77,000 in the first quarter ended March 31.
Viragen gained rights to Multiferon in 2001 when its majority owned subsidiary Viragen International Inc. acquired all of the outstanding shares of BioNative AB, of Umea, Sweden. BioNative was renamed ViraNative, and its interferon alfanative product was further developed to become Multiferon.
Charles Rice, Viragen's new CEO since March, said the company is involved in certain partnering neogitations for Multiferon. He hopes to have one semi-global agreement within the next few months as the company devises a global strategy for the product.
The company reported cash and cash equivalents of about $8 million as of March 31.
Viragen's stock (AMEX:VRA) rose 7 cents, to close at $1.40.