OxiGene Inc. pocketed $22.3 million through a private sale of common stock, a transaction that more than doubles its internal resources as it plans further drug development.

The Waltham, Mass.-based company said it would use the funds to progress its lead compound, Combretastatin A4 Prodrug (CA4P), for oncology and ophthalmology applications. The product is a vascular-targeting agent, which is designed to block the flow of blood that supplies solid cancer tumors and other abnormal vasculature, while leaving healthy cells intact.

To date, the Phase II-stage product has advanced in thyroid, head and neck, lung, prostate and colorectal cancers. OxiGene also is looking to begin randomized studies with the product in several undisclosed cancer indications.

For ophthalmology, the company plans to advance CA4P in retinal degenerative diseases and develop new formulations for local ocular delivery. The eye program stems from a recent finding from a human study of CA4P in wet age-related macular degeneration.

"This is an area in which we began some work over the past few years, and it's really now turning into something that could have some real potential upside," OxiGene President and CEO Fred Driscoll told BioWorld Today. "This drug's mechanism is to cause a catastrophic event in these newly formed blood vessels. It disrupts the cytoskeleton of endothelial cells, causing the cell to change its physical shape, which is typically flat in the blood vessel. It changes its shape to round, and this rounding up causes the vessels to clog and shut down."

Treatment with the drug in a myopic macular degeneration patient improved his 20/50 visual acuity to 20/20 in the study eye, with significantly reduced leakage in both eyes. Also, mouse and rabbit models of ocular disease have shown that CA4P blocks development and promotes regression of choroidal neovascularization.

Driscoll added that OxiGene's cancer trial findings have supplied sufficient safety data to transfer into CA4P's growing ophthalmology program. The compound's dual development plans seem to have attracted OxiGene's new investors in the process.

The offering grossed $24.2 million from the sale of about 2.8 million shares to undisclosed institutional investors at $8.78 apiece, a price that reflects no discount from the Jan. 13 closing price of the stock. The sale, which was conducted pursuant to OxiGene's October $50 million shelf registration statement, is expected to close on or about Jan. 16.

"Obviously, this strengthens our balance sheet for several years to come," Driscoll said. "And we're very pleased to have improved our institutional holdings and the quality of those holdings with those who have come in. Finally, I think it's virtually unheard of right now to do a transaction like this at market value with no warrants. I think that is a strong statement as to the belief in the stock and a belief in the technology."

On Wednesday, OxiGene's stock (NASDAQ:OXGN) gained 75 cents to close at $9.53.

OxiGene reported about 14 million shares outstanding as of Sept. 30. The company also reported $20.9 million in cash and marketable securities, as well as restricted cash, at that time, a figure it said would support operations for almost three years. OxiGene recorded a $3.4 million net loss during the third quarter.

New York-based Lehman Brothers Inc. served as the offering's lead placement agent, along with co-placement agents Rodman & Renshaw Inc., also of New York, and Roth Capital Partners LLC, of Newport Beach, Calif. New York-based Lazard Freres & Co. LLC served as a financial adviser.

Beyond CA4P, OxiGene's pipeline includes three preclinical-stage vascular-targeting agents. Driscoll said the company's OXi4503 compound is furthest along for cancer. Another compound, OXi6197, is being evaluated in studies sponsored by the National Cancer Institute in Bethesda, Md. Its OXi8007 compound is being developed as a second-generation ophthalmology product.