With a stock price more than triple what it was three months ago, IntraBiotics Pharmaceuticals Inc. raised $19.2 million in a private placement and enrolled its first patients in a pivotal trial of iseganan.
The Palo Alto, Calif.-based company sold about 1.8 million shares of common stock at $10.85 per share to a group of new and existing institutional investors. The investors also acquired warrants to buy 354,800 shares of common stock at the same price. IntraBiotics expects to net $18.4 million through the deal.
"Financings are significant for companies, but what's more important for us is that we're doing this program in ventilator-associated pneumonia" with iseganan, said company CEO Hank Fuchs, who was traveling in Amsterdam, the Netherlands, on business Tuesday. "We're excited about getting that trial into high gear and seeing if it will warrant registration."
A large chunk of the money will go toward the pivotal trial, which is expected to enroll 900 patients. A second pivotal trial will begin following the release of data from the first trial, expected by the end of 2004. Assuming positive data from both trials, the company expects to file for approval in the U.S.
IntraBiotics' stock has steadily inclined since July, when it closed at just under $4 per share. It reached its peak at $14 in September on news that the FDA approved the company's plans to proceed with the trial in ventilator-associated pneumonia. (See BioWorld Today, Sept. 22, 2003.)
With news of the financing and the enrollment of patients in the pivotal trial, the company's stock (NASDAQ:IBPI) climbed $2.13 Tuesday, or 19.8 percent, to close at $12.91.
Since receiving the FDA trial approval, the company has enrolled the first of the 900 patients in the U.S. The company expects to begin enrolling more patients in France, the Netherlands, Switzerland and Spain over the coming weeks. Patients will receive iseganan or placebo six times a day for up to two weeks.
Fuchs said the company has identified 45 sites for the trial. The company has full worldwide rights to iseganan, but could partner it in the future.
The market was not so kind to the company last year when iseganan failed in a Phase III study for oral mucositis. The stock dropped 70 percent, closing at 46 cents, and the company laid off 70 percent of its employees. (See BioWorld Today, Oct. 1, 2002, and Oct. 15, 2002.)
But news of the pivotal trials in ventilator-associated pneumonia changed things.
"The financing is an indication of Wall Street's support for our approach," Fuchs told BioWorld Today.
Iseganan has fast-track designation from the FDA as an oral solution to prevent ventilator-associated pneumonia. It is an antimicrobial peptide, the first in a new class of peptide drugs known as protegrins, which might reduce the probability of microbial resistance. Protegrins are a naturally occurring substance found in mammals.
It is not an antibiotic, so scientists believe antibiotic-resistant bacteria will not counter the drug.
"Unlike conventional antibiotics, iseganan doesn't cause resistance," Fuchs said. "This really has a potential to be a breakthrough kind of advance."
Ventilator-associated pneumonia occurs in about 15 percent to 30 percent of patients receiving ventilation for more than 48 hours. Studies have shown that patients who develop that kind of pneumonia can incur more than $40,000 in additional hospital charges. IntraBiotics estimates that more than 1 million patients annually are ventilated for more than 48 hours in North America, Western Europe and Japan.
"Pneumonia is the most common infection that occurs in critically ill patients," Fuchs said. It occurs when patients inhale into their lungs small quantities of bacteria.
Aside from its pivotal trials, IntraBiotics recently completed a Phase I trial of iseganan in cystic fibrosis. The company's next step is to begin a Phase II study, which it has already designed, Fuchs said.
As of June 30, IntraBiotics had $11.9 million in cash, cash equivalents and short-term investments.
Lazard Freres and Co., of New York, and WR Hambrecht + Co., of San Francisco, acted as financial advisers for the latest financing.
In other news, the company announced that it elected Mark Perry, a senior executive at Gilead Sciences Inc., of Foster City, Calif., to its board. Perry is the executive vice president of operations at Gilead.