National Editor

Aphton Corp. said it agreed to sell about 3.9 million shares of stock along with warrants for 980,000 shares to institutional investors for $22.7 million in a transaction expected to be completed today.

The purchase price was a 9.4 percent discount to the average closing price of Miami-based Aphton's shares for five trading days before investors signed on, and the warrants bear a per-share exercise price with a 40 percent premium to the purchase cost.

In April, the firm pulled down $20 million in financing, saying it would not restructure its co-promotion and licensing deal with Lyon, France-based Aventis Pasteur Ltd. for the lead cancer vaccine, G17DT, and would allow a December letter of intent to do so. But the company said it planned to reduce spending in the next 12 months by more than 60 percent, thereby cutting it to less than $16 million, allowing the firm to operate into the first quarter of 2004 without any additional funds. (See BioWorld Today, April 2, 2003.)

The vaccine contains a portion of the hormone gastrin 17 and diphtheria toxoid, chemically bound together to neutralize G17 and the hormone Gly-G17.

With Aventis providing a royalty split of more than 50 percent for countries in North America and Europe, Aphton also said in April it would seek to file by September for approval to market G17DT as a monotherapy for advanced pancreatic cancer patients in the European Union, Canada and Australia.

But in a July letter to shareholders, Aphton said the company's interest had shifted to seeking approval in the U.S. first, and Aphton representatives were hoping to meet with the FDA in the fourth quarter, bringing with them positive data from an earlier-disclosed Phase III trial in "foreign countries."

One overseas regulatory agency has been contacted with the data, Aphton has said, but a spokeswoman for the company declined to disclose where that took place. She also said the firm is limited to what has been made public in news releases and filings with the SEC.

In March, the company said the drug showed a statistically significant overall median survival benefit of 83 percent in the most recent analysis of the Phase III data, but the number of patients was not disclosed, nor have details been offered since.

Aphton said in paperwork filed July 18 with the SEC, clarifying the shareholders' letter, that the randomized, controlled Phase III trial is testing G17DT as a monotherapy vs. placebo for advanced pancreatic cancer. Final audited data are expected to be available in the fourth quarter, the filing said.

Another Phase III trial under way is testing G17DT when administered with gemcitabine vs. gemcitabine alone for advanced pancreatic cancer. Data are expected in mid-2004.

A Phase II trial with G17DT when administered with cisplatin and 5-FU for advanced stomach cancer and/or esophagus cancers is nearing the finish line. Interim data were offered at the American Society of Clinical Oncology meeting in June.

Another Phase II trial with the drug in patients with gastroesophageal reflux disease (GERD) has been initiated and recruitment is on hold for further funding.

In July, the European Union granted orphan drug status to G17DT in pancreatic cancer and gastric cancer indications. The FDA granted the same status one year earlier.

Aphton has said it aims to license G17DT for cancer outside North America and Europe, including Japan, where the focus will be on gastric rather than pancreatic cancer, and to license it for GERD.

The company's stock (NASDAQ:APHT) fell 43 cents Wednesday to close at $6.35.