It has granted underwriters another 975,000 shares to cover overallotments, which, if exercised in full, would raise about $5.4 million more. The offer is expected to close Oct. 28.
Managing underwriters are Thomas Weisel Partners LLC, of San Francisco; CIBC World Markets, of Toronto; and Punk, Ziegel & Co., of New York.
Depomed, a Menlo Park, Calif.-based company, intends to use proceeds to support its growing pipeline, John Hamilton, company vice president and chief financial officer, told BioWorld Today. The company is developing two late-stage products, Metformin GR (Gastric Retention) for Type II diabetes, and Ciprofloxacin GR for urinary tract infections. New drug applications are expected to be filed for both candidates next year.
"We're delighted to have completed this financing in a difficult market, and very pleased with the job the bankers did for us," Hamilton said.
As of Sept. 30, Depomed had $15 million in cash and 25.9 million outstanding shares. After closing the financing, Depomed will have about $19 million remaining on its $60 million shelf registration filed in late September.
Hamilton wouldn't release the company's burn rate, but said proceeds likely would enable the company to complete clinical programs for Metformin GR and Ciprofloxacin GR, and should support Phase II trials of Gabapentin GR and Furosemide GR. Proceeds also will pay for studies on two additional products that have not been named.
Depomed uses its Gastric Retention system to develop new formulations of existing products that can be dosed less frequently, therefore possibly producing fewer side effects. The GR system swells after it is ingested, staying in the stomach while releasing the drug.
The lead product using that system, Metformin GR, could make it to market as early as 2005. Currently the subject of a second Phase III study, Depomed and partner Biovail Corp., of Toronto, plan to file a new drug application in Type II diabetes in the first half of 2004.
Depomed stands to gain $37 million through a licensing deal signed with Biovail in May 2002. The deal gave Biovail the right to market Metformin GR in the U.S., Puerto Rico and Canada. Biovail will handle regulatory filings and pay Depomed royalties. (See BioWorld Today, May 30, 2002.)
Metformin was approved in 1994 for Type II diabetes. Used either alone or with sulfonylureas, it is indicated for cases that cannot be controlled by proper dietary management, exercise and weight reduction or when insulin therapy is not appropriate. Metformin is marketed as once-per-day Glucophage XR by New York-based Bristol-Myers Squibb Co.
Following Type II diabetes, Depomed hopes to file a NDA in the second quarter of 2004 for Ciprofloxacin GR in urinary tract infections. Ciprofloxacin GR is a new formulation of Bayer AG's Cipro, an antibiotic. (See BioWorld Today, June 4, 2003.)
Depomed is in discussions with potential partners for Ciprofloxacin, Hamilton said.
Depomed licensed and continues development of Gabapentin GR, a candidate once being developed by Depomed Development Corp. Ltd., a joint venture formed by Depomed and Elan plc, of Dublin, Ireland. The latter recently terminated its part of the agreement.
Gabapentin is used to control some types of seizures and to alleviate nerve pain caused by the herpes virus or shingles. Depomed plans to enter Phase II trials in mid-2004. New York-based Pfizer Inc. sells gabapentin as Neurontin.
In early 2004, Depomed expects to enter Phase II trials for Furosemide GR, an oral diuretic. Aventis SA sells it under the name Lasix for the prevention and treatment of hypertension and congestive heart failure, as well as other conditions.
Depomed's stock (AMEX:DMI) closed Thursday at $5.65, down 21 cents.