In addition to raising $20 million in a private financing, Spectrum Pharmaceuticals Inc. - along with partner GPC Biotech AG - initiated a Phase III study of its lead prostate cancer drug satraplatin less than a month after the FDA gave permission for the advanced trial.
"We were very pleased with how quickly we were able to get the trial running, get the patients screened and begin dosing the drug," said John McManus, Spectrum's vice president of finance and strategic planning. "We're hoping that's a sign of patient response and enthusiasm about satraplatin."
The start of the trial triggered a $1 million cash milestone payment and a $1 million equity investment from GPC to Spectrum. Spectrum could earn another $18.2 million from the financing if purchasers decide to exercise their warrants.
Most of the funds from the financing are expected to go toward advancing the clinical development of Eoquin for superficial bladder cancer and elsamitrucin for non-Hodgkin's lymphoma, as well as to further develop Spectrum's generic business. The company also plans to use the funds to acquire and develop additional oncology products and for general expenses and working capital.
The funding is Spectrum's sixth private financing since last November, McManus said.
Around that time last year, he said, the company had about $38,000 in cash and a $1 million market cap.
"I think most people really had written off the company as being dead," he told BioWorld Today. "But through the partnership with GPC, we took a lot of the capital burden off of the company."
It was in the spring of 2002 when trouble started, as the company's lead drug, Neotrofin, failed to meet its primary endpoints in an Alzheimer's disease trial. By August of that year, the company - then called NeoTherapeutics Inc. - decided to implement a restructuring plan that would place more focus on satraplatin and reduce the company's burn rate to less than $500,000 a month. (See BioWorld Today, Aug. 23, 2002.)
The $20 million financing was done with the sale of Series E convertible preferred stock. Each share is convertible into Spectrum common stock at a price of $5 per share. Half of the preferred shares can be redeemed at the investor's discretion for face value if Spectrum has not concluded the acquisition of an oncology product by the end of December.
Purchasers also received warrants for 2.8 million shares of common stock at $6.50 per share, which, if exercised, would generate up to an additional $18.2 million in proceeds. Institutional investors included Baystar Capital, SDS Merchant Fund, SCO Capital Partners, Xmark Funds, Quogue Capital and ProMed Partners LP. SCO Securities LLC acted as placement agent on the transaction.
"We feel we're in pretty good shape and our balance sheet is looking pretty strong," McManus said.
Earlier this month, Martinsried, Germany-based GPC and Irvine, Calif.-based Spectrum received the go-ahead from the FDA to begin a Phase III trial of satraplatin to treat hormone-refractory prostate cancer. (See BioWorld Today, Sept. 3, 2003.)
On Monday, Spectrum announced that the first patient has been dosed in the multicenter, global, randomized study. Scientists are looking at satraplatin in combination with the synthetic hormone prednisone vs. prednisone alone as a second-line chemotherapy regimen. The trial, which is expected to include more than 100 sites worldwide, has a primary endpoint of time to disease progression but also includes objectives for pain control, survival and drug safety.
"Our hope is to file an NDA sometime during 2006," McManus said.
An estimated one in six men is expected to develop prostate cancer over his lifetime. About 100,000 patients in North America, Europe and Japan have hormone-refractory prostate cancer, meaning they failed hormone therapy and have only a limited number of other treatment options, such as chemotherapy. For patients who fail first-line chemotherapy, there are no other approved treatment regimens.
The FDA granted satraplatin fast-track designation. The drug, an orally administered compound and a member of the platinum family, also has been studied in ovarian and small-cell-lung cancer.
GPC and Spectrum formed their $22 million licensing agreement a year ago. The deal gave GPC worldwide rights to satraplatin. Spectrum received a $2 million up-front payment, the promise of the milestone payment and equity investment at the start of a Phase III trial, and could potentially earn another $18 million in milestone payments. GPC is fully funding development and commercial expenses, and Spectrum would receive royalty payments and could co-promote the drug in the U.S. (See BioWorld Today, Oct. 2, 2002.)
NeoTherapeutics acquired satraplatin in September 2001 from Johnson Matthey plc, of London. Matthey developed the compound in conjunction with Bristol-Meyers Squibb Co., of New York.
Aside from satraplatin, Spectrum is studying elsamitrucin in a Phase II study for non-Hodgkin's lymphoma. Another of its potential products, Eoquin, is being studied to treat superficial bladder cancer and might have applications as a radiation sensitizer.
The company also is working to market generic drugs in the U.S., and it has a pipeline of preclinical neurological drug candidates for attention deficit hyperactivity disorder, schizophrenia, mild cognitive impairment and pain.
Spectrum's stock (NASDAQ:SPPI) fell $1 Monday to close at $7.02.