AVI BioPharma Inc. raised $15 million in gross proceeds after agreeing to a direct equity placement with several institutional investors.

The Portland, Ore.-based antisense and cancer drug company reached definitive agreements to sell about 3.2 million common shares at $4.62 apiece, along with five-year warrants that allow the investors to purchase almost a million more shares at an exercise price of $5.50 apiece. AVI also granted the investors additional warrants to purchase up to 1.6 million shares at $4.62 apiece, which are exercisable for 30 trading days after the transaction closes.

"Whenever there is an opportunity to strengthen the balance sheet and give management more options and greater leverage in furthering the company's products, I think many would take that avenue," said Michael Hubbard, AVI's director of investor relations.

On Thursday, the company's shares (NASDAQ:AVII) fell 43 cents to close at $4.53.

New York-based Rodman & Renshaw Inc. acted as the deal's exclusive placement agent. The securities are being sold pursuant to AVI's effective $75 million shelf registration statement, which Hubbard said remains open.

The financing supplements its cash and short-term securities reserves, which stood at $27.7 million as of Sept. 30. During the quarterly period that ended that date, AVI recorded a $4.6 million net loss and reported 31.2 million shares outstanding. Its financial figures were bolstered earlier this year through a $20.8 million private equity financing. (See BioWorld Today, May 6, 2003.)

The company said it would use the latest proceeds to fund operations and ongoing clinical programs for cardiovascular and infectious diseases, as well as cancer. Its near-term plans include Phase III trials scheduled to begin by or during the first quarter of next year to evaluate two investigational drugs, the cardiovascular drug Resten-NG and the therapeutic cancer vaccine Avicine.

"This particular funding wasn't critical to our company's survival," Hubbard told BioWorld Today. "But I think it does add a significantly important element in the options in our strategic planning, and in the leverage we have as we further our product development."

AVI is planning a European study of a stent outfitted with Resten-NG, which is designed to inhibit the expression of c-myc, a gene that plays a role in the development of the pathology leading to restenosis. Hubbard said the company remains in discussions with potential partners related to a delivery platform.

Avicine, which is designed to elicit an immune response to a tumor-associated antigen called human chorionic gonadotropin, will be studied in pancreatic cancer patients. Hubbard noted that the product's development rests in part with partner SuperGen Inc., of Dublin, Calif.

Data released Thursday from another program, which studied an antisense drug targeting calicivirus, revealed survival among 17 of 20 kittens that received the Neugene antisense drug. The felines were studied at an animal shelter in Eugene, Ore., which had been forced to close due to an outbreak of feline calicivirus, a single-stranded RNA virus. All 30 untreated kittens died within 24 to 96 hours of the onset of symptoms. AVI previously reported similar positive results from a feline calicivirus outbreak in an Atlanta animal shelter.

The company's antiviral program uses Neugene antisense compounds to target other single-stranded RNA viruses such as West Nile virus, the coronavirus associated with severe acute respiratory syndrome and hepatitis C.

"We have a lot of potential and a lot of things we're working on," Hubbard said, "but we also understand the concept of focus."

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