Cancer company Cytogen Corp. boosted its balance sheet by raising $26 million in gross proceeds through a registered direct offering.
The Princeton, N.J.-based business on Thursday said it entered purchase agreements for the sale of about 2.6 million common shares at $10.10 apiece. Net proceeds would total $24 million.
The offering's per-share price represents a 10 percent discount relative to the stock's $11.20 closing bid on Wednesday. On Friday, its stock (NASDAQ:CYTO) gained 54 cents to close at $12.35.
"We have [planned] a couple of uses of proceeds," Cytogen President and CEO Michael Becker told BioWorld Today. "The first is to further enhance and strengthen our sales and marketing infrastructure. We've been adding headcount to our sales group and have increased that pretty dramatically over the past six months. We want to continue to support that as a result of the recent reacquisition of our lead therapeutic product, Quadramet."
Last summer, the company regained Quadramet rights from Berlex Laboratories, a U.S. affiliate of Berlin-based Schering AG. The deal closed in August, two months after it was first reported. (See BioWorld Today, June 17, 2003.)
Quadramet received FDA approval about six years earlier for use as a skeletal-targeting therapeutic radiopharmaceutical for the relief of pain due to bone metastases. About a year and a half later, Berlex obtained the product's North and South American marketing rights as Cytogen had not yet established an internal sales and marketing infrastructure. (See BioWorld Today, April 1, 1997, and Oct. 30, 1998.)
Becker said that since August, Cytogen has increased that group from 25 to 38 employees. He added that the company also plans to use proceeds to invest in studies designed to expand Quadramet's use, including combination trials with Taxotere (from Aventis SA) and Zometa (from Novartis AG), which are used largely for prostate cancer and multiple myeloma, respectively.
"We've certainly had a lot of interest from the investment community," Becker noted. "If you look at our institutional holdings, especially over the past 12 months, they have increased pretty dramatically. I think our institutional ownership, prior to this transaction, was about 34 percent."
Just last fall, the company raised $20.5 million through the sale of about 1.9 million shares. That financing bolstered its year-end reserves, which totaled $30.2 million in cash, cash equivalents and short-term investments as of Dec. 31. Through that date, Cytogen had about 12.1 million shares outstanding. The company recorded a $3.1 million net loss in the preceding quarterly period. (See BioWorld Today, Nov. 10, 2003.)
The latest offering stems from a shelf registration statement declared effective by the SEC in October. New York-based CIBC World Markets Corp. acted as lead placement agent, along with co-placement agents JMP Securities LLC, of San Francisco, and ThinkEquity Partners LLC, also of New York.
Becker attributed recent investor confidence to a variety of factors, including Cytogen's reacquisition of Quadramet, prospects related to an investigational molecular imaging agent called Combidex that remains under FDA review and recent changes in management.
The company has exclusive U.S. marketing rights to Combidex (ferumoxtran-10), which consists of lymphotropic superparamagnetic nanoparticles and is used with magnetic resonance imaging to aid in the diagnosis of metastatic lymph nodes. Findings from a Phase III trial were published in the September issue of Radiology, showing the agent helped in the noninvasive evaluation of metastatic lymph nodes in patients with head and neck, chest, breast, abdominal and pelvic cancers. The product, which is being reviewed by the FDA's medical imaging division, was developed by Advanced Magnetics Inc., of Cambridge, Mass.
Cytogen also is developing therapeutics targeting prostate-specific membrane antigen. The program, which is being developed in concert with Progenix Pharmaceuticals Inc., of Tarrytown, N.Y., has advanced a cancer vaccine into Phase I studies and another about to enter clinical trials. The partners also are evaluating monoclonal antibodies that are in late-stage preclinical development.
Besides Quadramet, Cytogen also markets two other products in the U.S. - Prostascint, an agent used to image the extent and spread of prostate cancer, and NMP22 Bladderchek, an in vitro diagnostic test for bladder cancer.