Ariad Pharmaceuticals Inc. pocketed gross proceeds of $41 million through a private placement of its common stock to fund further development of its cancer compounds.
The Cambridge, Mass.-based company entered definitive agreements with unaffiliated institutional investors who will purchase about 6.4 million shares at $6.35 apiece, a price that reflects the stock's average closing price for the past five trading days. On Friday, Ariad's shares (NASDAQ:ARIA) dropped 41 cents to close at $6.43.
"We are focused on developing oncology products, and we have one in Phase I right now that we anticipate will go into multiple Phase II trials in the second quarter of next year," Tom Pearson, Ariad's senior vice president of corporate strategy and communication, told BioWorld Today. "And we anticipate our second product will enter clinical trials in the third quarter of next year."
Its lead candidate, AP23573, remains in two early clinical studies testing a pair of dosing schedules. The product, an m-TOR inhibitor, is designed to interrupt solid tumor cells from signaling for nutrients and stop the stimulation of growth factors, causing the tumor cells to starve. Pearson said the company has yet to determine a targeted indication for its planned Phase II program.
Ariad's second compound, AP23464, is approaching clinical studies in leukemia and metastases. Its third drug, AP23841, is being developed to treat cancer that originates in or spreads to bone.
"Obviously, this deal will certainly allow us to move forward very aggressively with those plans," Pearson said, adding that the company discovered, developed and still owns all rights to the three small molecules. "We are very pleased with what we have in terms of our product pipeline, and it's great to be in a position to fund these without worrying about where the funds will come from. It will allow us, if we choose to do so, to delay partnering until we have much more decisive clinical results."
The latest financing pads Ariad's most recently reported cash reserves of $26.6 million, as of June 30.
Following the placement, the company will have about 45.4 million shares outstanding. The stock was offered through a shelf registration filed in July for the sale of up to 7.5 million shares. Ariad said it expects the transaction to close within three business days.
Lehman Brothers Inc. and Rodman & Renshaw Inc., both of New York, served as the offering's placement agents.