InSite Vision Inc. received the go-ahead from shareholders for a much anticipated $16.5 million private placement that the company will use for its bacterial conjunctivitis product, AzaSite.
Stockholders gave approval to increase by 60 million the authorized number of outstanding shares of InSite's common stock as part of the company's 2004 proxy statement at Tuesday's annual meeting. InSite Vision, which now has 120 million shares of authorized common stock, raised about $2 million in an initial closing conducted in March. A final closing raising another $14.5 million is expected to occur before June 15. New York-based Paramount BioCapital Inc. is serving as the sole placement agent for the financing.
Kumar Chandrasekaran, the company's president and CEO, said the company anticipated initiating the first of two Phase III trials of AzaSite early in the third quarter, beginning the second trial shortly thereafter and filing an NDA during the second half of 2005.
Chandrasekaran could not be reached for comment on Wednesday.
According to the company's first-quarter report, it only had enough funds to take it through mid-June, making the positive stockholder vote necessary for the company's future. InSite Vision's independent auditors expressed a doubt in April about the company's ability to continue as a going concern. The company laid out plans in its quarterly report to cease all operations and liquidate the remaining assets, if it could not raise additional funds.
With the completion of the financing, InSite Vision will be able to continue operations through the third quarter of 2005. As of March 31, the Alameda, Calif.-based company reported only $1.5 million in cash and cash equivalents.
To stay afloat in 2003, the company laid off about 42 percent of its personnel, and senior management voluntarily reduced their salaries. The company placed several development programs on hold and slowed clinical activities related to AzaSite (also called SV-401). InSite also extended the payment of its liabilities.
In December, InSite Vision agreed to sell ISV-403, its drug for ocular infections, to Bausch & Lomb, of Rochester, N.Y., for $1.5 million in cash and the return of $4 million of Series A-1 preferred stock and related dividends. InSite also will receive reimbursement of certain product development expenses and a percentage of future sales. The product, a formulation of a fourth-generation fluoroquinolone, entered a Phase I trial last year.
InSite Vision will provide contract research services for Bausch & Lomb on ISV-403, but plans to focus mainly on AzaSite.
AzaSite is a topical formulation of azithromycin, an antibiotic that is used to treat respiratory and other infections. In clinical trials, it has demonstrated safety and efficacy compared to placebo. The company received the go-ahead in January 2003 to begin two Phase III trials in bacterial conjunctivitis, but financial constraints delayed the studies. (See BioWorld Today, Jan. 17, 2003.)
The company expects to start the U.S.-based trials in the third quarter in both children and adults. Primary endpoints of both studies would be microbial eradication and clinical cure.
InSite Vision has an accumulated deficit of about $113.4 million.
The company's stock (AMEX:ISV) fell 3 cents to close Wednesday.