West Coast Editor
About one year after failing to hit the primary endpoint in Phase II trials with its lead product, Alteon Inc. said it has entered a deal with institutional investors to raise as much as $12.8 million, which the firm will spend mainly on an ongoing Phase II program with the same compound.
Alteon's stock (AMEX:ALT) closed Monday at $1.08 down 10 cents, a drop that Kenneth Moch, Alteon's CEO and president, noted is customary after a financing.
New and existing institutional investors plan to buy 8 million shares of common stock at $1 per share, for net proceeds after expenses and fees of about $7.6 million. The same investors might take part in a second tranche of 3.2 million shares at $1.50 per share, no later than the end of this year.
"We'll have about $16 million or $17 million at the end of the first half," Moch said, and the burn rate of about $1 million to $1.5 million is expected to hold steady.
The Phase II drug is alagebrium chloride, or ALT-711, for systolic hypertension and heart failure. It's one of a class of compounds that act on protein-glucose complexes called Advanced Glycolation End Products, which crosslink to block body-tissue functions, a causal factor in age-related diseases and diabetic complications.
"Alteon pioneered the whole area in the early 1980s," Moch said. The company officially was founded in 1986.
Last summer, Alteon took a 75 percent loss when ALT-711 failed to show statistical significance in reducing systolic blood pressure by office-cuff measurement when compared to placebo at the highest of four doses, 210 mg daily, in Phase IIb trials known as Sapphire and Silver. (See BioWorld Today, July 18, 2003.)
A surprise placebo result partly was blamed, and Alteon pointed to some positive data from the trials - data the ongoing Phase II work is designed to confirm before the company moves on to Phase III.
"There's an old saying, Never mistake the company for the stock,'" Moch said, acknowledging that some investors apparently believed ALT-711, and perhaps Alteon, were dead after the largely unfavorable results last year.
"Far from it," he said. "The drug is active, and our challenge is to be able to design trials to prove it to [the FDA]."
Ongoing trials have been named Spectra and Pedestal. Like the earlier studies, their names are rough acronyms, with Spectra standing for Systolic Pressure Efficacy and Safety Trial of Alagebrium, and Pedestal standing for Patients with Impaired Ejection Fraction and Diastolic Dysfunction: Efficacy and Safety Trial of Alagebrium.
Pedestal is a 20-patient, open-label trial. For Spectra, "our plan is to enroll 390 patients to get 220 evaluable patients," Moch said.
"We also have a study under way at Johns Hopkins, which is a mechanism-of-action study" classed as a Phase IIa and designed to test ALT-711 in endothelial dysfunction, he said.
Alteon aims to complete "one if not both of the Phase IIa's by year-end," Moch told BioWorld Today. The Phase IIb trial is expected to finish in 2005. Thus far, ALT-711 is unpartnered.
"Our thinking is that after Phase IIb [data are available] would be the timeline for the partnering effort," Moch said.