As it nears a new drug application filing for its second product, Avanir Pharmaceuticals Inc. priced a $25 million common stock offering that will allow it to continue development of its pipeline products.
The company sold 19.7 million shares of Class A common stock to the sole bookrunner New York-based Lazard Freres & Co. LLC for $1.27 per share, a slight discount to the company's closing stock price Tuesday of $1.33. The offering is expected to close next week.
"We're finishing up a Phase III program and plan to submit an NDA this year, so this is going to be able to show everybody that we'll have the funding to complete that, as well as to continue to move our extensive pipeline forward without having a hiccup," said Gerald Yakatan, president and CEO of San Diego-based Avanir. "We're a big believer in the pipeline concept, in that you can replace money, but you can't replace time. So we have a nice engine here in developing drugs and we want to keep it going."
Avanir granted the underwriter an option to purchase another nearly 3 million shares to cover overallotments. The company's stock (AMEX:AVN) rose 12 cents on Wednesday, to close at $1.45.
The company is finishing up a Phase III trial in 150 multiple sclerosis patients with pseudobulbar affect evaluating a product called Neurodex. It demonstrated statistical significance in a previous Phase III trial in 140 patients with amyotrophic lateral sclerosis (ALS) with pseudobulbar affect. (See BioWorld Today, Nov. 20, 2002.)
With data from the MS trial expected in the third quarter, the company plans to file an NDA by the end of the year, seeking a broad label for Neurodex across all neurodegenerative diseases in which pseudobulbar affect is found.
The condition - also known as emotional lability, or pathological laughing and weeping - affects patients that have an underlying neurodegenerative disease, such as ALS, MS, stroke, Alzheimer's disease, traumatic brain injury or Parkinson's.
"They lose ability to modulate emotional responses," Yakatan told BioWorld Today. "They can laugh when they're not happy and they can cry when they're not sad. The laughing or crying is incongruent with emotional status of the patient. They just have no control over it."
Yakatan estimates the market potential for Neurodex in that indication would be about $500 million in 2006, when it could reach the market. Worldwide, the potential is about $1 billion, he said. The company is actively seeking a U.S. marketing partner and is considering co-marketing the product.
The recent $25 million financing will take the company through the NDA filing process and help it get started with a Phase III trial in a second indication for Neurodex - neuropathic pain. Neurodex demonstrated positive results in a Phase II trial in that indication completed last summer. Chronic cough is another potential indication for Neurodex.
As of the end of March, Avanir reported $13.4 million in cash. It raised the $25 million so it would have the resources to continue with programs behind Neurodex, Yakatan said. The company started a Phase I trial in April 2003 studying a treatment called AVP-13358 in allergy and asthma, and it is working on a preclinical product in the area of reverse cholesterol transport, which could enter the clinic in 2005.
"That's another program that I wanted to make sure that we could continue to move forward," Yakatan said. The product appears to be able to prevent or regress atherosclerotic lesions to prevent heart attacks and strokes. "We're pretty excited about the animal data," he said.
The company also is using its Xenerex technology to develop monoclonal antibody treatments to the toxins of anthrax and cytomegalovirus. Its first anthrax antibody, AVP-8C1, provides immediate post-exposure neutralization and immediate immunity to rats exposed to a lethal dose of recombinant anthrax toxins.
Avanir was formed in 1988 and went public in 1990. The FDA approved its first product, Abreva, in July 2000 as a topical treatment for cold sores. Abreva (docosanol 10 percent cream) is the only approved product of its kind available without prescription. GlaxoSmithKline plc, of London, manufactures, markets and distributes the product in the U.S. The product also is approved in Canada, Korea and Israel. It is under review in Europe.
Avanir moved both Abreva and Neurodex through the clinic itself.
"Eventually, people are going to understand that we know something about developing and getting things approved," Yakatan said.