National Editor

With several late-stage products in the hopper, ophthalmology-focused ISTA Pharmaceuticals Inc. priced a public offering of 4 million shares at $9.50 per share to gross $38 million.

The company had about $19 million in cash at the end of the third quarter, noted Vicente Anido, president and CEO, so the stock sale brings Irvine, Calif.-based ISTA to $57 million in reserves.

"We've been burning $22 million a year up to this point," he said. "As we go commercial with [several pipeline products], the burn will go up a little bit but, of course, will be offset with revenues."

The company's stock (NASDAQ:ISTA) dipped $1.21 Thursday, or 11.9 percent, to close at $8.99.

This summer, ISTA made news with an approvable letter from the FDA for the glaucoma product Istalol, a liquid, once-per-day formulation of the beta-blocker timolol developed by Senju Pharmaceutical Co. Ltd., of Osaka, Japan. (See BioWorld Today, July 29, 2003.)

The drug is one of three late-stage compounds ISTA acquired from AcSentient Inc., of Research Triangle Park, N.C., in May 2002. The others are Xibrom (bromfenac), a topical nonsteroidal anti-inflammatory drug for the treatment of ocular inflammation, for which a new drug application filing is expected early next year; and the orphan drug Caprogel (aminocaproic acid in gel form), a compound to treat hyphema, or bleeding into the anterior eye chamber, which is in a reformulation study. (See BioWorld Today, May 7, 2002.)

"We need one more [Caprogel] Phase III trial in the U.S.," Anido told BioWorld Today. "I think it will be another quarter or two before we can know if the reformulation will work."

The original formulation was too firm.

"These patients have bleeding anyway into the front part of the eye," Anido said, so ISTA's scientists sought to devise "something a little more pharmaceutically elegant than that."

ISTA also has Vitrase, an ovine hyaluronidase-based treatment for vitreous hemorrhage. In March, the FDA's Dermatologic and Ophthalmic Drugs Advisory Committee voted that the company's data did not support efficacy, but the committee did say Vitrase's benefits outweighed its risks. (See BioWorld Today, March 18, 2003.)

The FDA issued an approvable letter in April for Vitrase, saying additional data analysis and/or trials might be necessary. Talks with the agency are ongoing. (See BioWorld Today, April 8, 2003.)

"We're still wading through the data," Anido said.

A second NDA has been submitted for the use of Vitrase as a spreading agent to help disperse and absorb other drugs. No clinical trials were required for that indication, which is under priority review with FDA action expected in February, Anido said. ISTA's partners for Vitrase are Allergan Inc., of Irvine, Calif., and Otsuka Pharmaceutical Co. Ltd., part of the Otsuka Group, of Tokyo.

"Vitrase gets a lot of attention because it's the original product on which the company was founded, and we've been working on it for about 10 years," Anido said, but Istalol and Xibrom are "fairly significant in terms of revenue generation. Not only are they good markets, but they're un-partnered."

Underwriters in the financing have an option to buy 600,000 in overallotments, if any, of which 500,000 shares would be sold by certain shareholders and the rest by the company.

Thomas Weisel Partners LLC, of San Francisco, acted as the lead underwriter. Co-managers were Jefferies & Co., of New York; RBC Capital Markets, of Toronto; and Roth Capital Partners LLC, of Newport Beach, Calif. The transaction is expected to close Nov. 18.