Washington Editor

NeoPharm Inc. intends to use proceeds from a $68.4 million public offering to advance its cancer agent for malignant glioma.

The firm is seeking funds to support its pivotal Phase III trial of IL13-PE38QQR (referred to as IL13), scheduled to begin in the first quarter. Beyond bankrolling the product's development, NeoPharm, of Lake Forest, Ill., will use proceeds to fund other clinical and preclinical studies, potential licenses and acquisitions, working capital, capital expenditures and other corporate expenses, Paul Arndt, NeoPharm's corporate communications manager, told BioWorld Today.

NeoPharm is offering 3.75 million shares of its common stock at $18.25 per share, which would bring in about $63.8 million after fees. Underwriters have been granted an option to purchase 562,500 additional shares for 30 days after the offering to cover overallotments, if any. Overallotments would produce about another $10.2 million.

NeoPharm's stock (NASDAQ:NEOL) rose 13 cents Thursday to close at $19.

As of Sept. 30, NeoPharm had about $51 million in cash, with a burn rate at the time of about $13 million per quarter. NeoPharm's year-end financial statement is expected sometime around March 15. Following the public offering, NeoPharm will have about 22.6 million shares outstanding.

The company's drug development work focuses on tumor-targeting efforts and an array of NeoLipid compounds, billed by the company as the next generation of liposomes.

Leading the way is IL13, a candidate exclusively licensed from the Bethesda, Md.-based National Cancer Institute. It has received FDA orphan drug status and fast-track designation. It is administered continuously and directly to brain tumors through positive-pressure convection-enhanced delivery, the company said.

In the upcoming Phase III trial, IL13 will be compared in a randomized study to Gliadel Wafer, developed by Guilford Pharmaceuticals Inc., of Baltimore. Arndt said the trial is expected to take about 18 months. Meanwhile, the company's NeoLipid program features five Phase I/II products under evaluation for a variety of cancers including colorectal, lung, pancreatic, prostate, breast and ovarian.

Using its NeoLipid technology, the company combines drugs or other compounds in proprietary lipids to create liposomes. Incorporating drugs into liposomes is believed to reduce toxicity while maintaining therapeutic efficacy or potency of the product.

The company also this quarter launched NeoPhectin for use in laboratories conducting research that requires use of a transfection reagent. NeoPhectin is an in vitro transfection reagent that is an outgrowth of the company's lipid-development program and uses its cationic (positively charged) cardiolipin technology.

For the public offering, UBS Securities LLC, of New York, is the sole book-running manager. Robert W. Baird & Co. Inc., of Chicago; First Albany Capital Inc., of New York; and JMP Securities LLC, of San Francisco; are co-managers.