National Editor

With an in-licensed drug for pulmonary arterial hypertension and a name change as of last fall, CoTherix Inc. - formerly known as Exhale Therapeutics Inc. - filed for an initial public offering worth about $70 million.

That amount, combined with current cash and cash equivalents of about $20.5 million, would be enough to keep it going for at least 12 months, the company said in its filing. Neither the IPO share price nor number of shares have been set.

Belmont, Calif.-based CoTherix said proceeds would be used to develop Ventavis (iloprost), the synthetic prostacyclin analogue licensed in October from Schering AG, of Berlin. CoTherix plans to file a new drug application for Ventavis this year, based mainly on Schering studies, including a pivotal Phase III trial. (See BioWorld Today, Oct. 15, 2003.)

The IPO gains also would help pay for CoTherix's sales and marketing, as well as licensing and developing other drug candidates and paying the $7 million milestone fee due to Schering if the NDA is accepted. CoTherix paid Schering $6 million upon signing the deal, which includes a total of $30 million more in milestones.

CoTherix said it plans to explore Ventavis in combination therapy with a currently approved treatment for PAH - a disorder that afflicts about 50,000 people in the U.S., of which an estimated 15,000 are diagnosed and undergoing treatments with drugs such as prostacyclins and endothelin receptor antagonists. Ventavis is taking aim at the existing prostacyclin therapies, current prices for which add up to about $100,000 per patient annually.

Marketed prostacyclins for PAH are delivered through challenging and inconvenient routes, subcutaneously or intravenously, whereas inhaled Ventavis is administered by way of a nebulizer.

The European Agency for the Evaluation of Medicinal Products approved Ventavis in September for primary pulmonary hypertension, and in Schering's Phase III trial, the primary composite endpoint was met by 17 percent of patients taking the drug and 5 percent given placebo.

Also in the CoTherix hopper is CTX-100, an inhaled hyaluronic acid solution, in early stage research for emphysema due to smoking and genetic emphysema. The drug has completed two Phase I trials and is due for a Phase I/II study in the second half of this year, also to be funded by IPO proceeds.

CoTherix conducted a Series C financing in October, entering an agreement through which it committed to sell an aggregate of $54.1 million of Series C redeemable convertible preferred stock at various times for a combination of cash and cancellation of indebtedness. In October and November, the firm raised net proceeds of $29.1 under the agreement, and in February gained net proceeds of $25 million by issuing more shares of Series C redeemable convertible preferred stock to the same group of investors that took part in the earlier closings.

Research and development costs dropped from $3.4 million in 2002 to $2.8 million in 2003, according to the IPO filing, mainly because preclinical testing of CTX-100 (which made up the bulk of CoTherix's expenses) was completed, but the company said R&D likely will jump as the development of Ventavis goes ahead. The company was incorporated in Delaware in 2000, and since its inception, has tallied losses from operations totaling $20.4 million.

Also this year, CoTherix said it will move into a new facility, the five-year operating lease for which was signed in December. The company expects to take occupancy this month.

Underwriters for the offering are CIBC World Markets Corp., of New York; Piper Jaffray, of Minneapolis; Needham & Co., of New York; and Thomas Weisel Partners LLC, of San Francisco.