Vion Pharmaceuticals Inc. assured itself of some spending flexibility at least through next year after agreeing to a private placement worth $11.3 million.

In a press release, CEO Alan Kessman said the financing would "provide us with funding through 2004 based on current estimates." Officials at the New Haven, Conn.-based company could not be reached for comment.

But before the placement, through the quarterly period ended June 30, Vion reported $10.5 million in cash and cash equivalents. The company also reported a $3.1 million net loss during the three-month time frame.

On Tuesday, Vion said it entered an agreement to sell about 6.5 million common shares at $1.75 apiece. The unnamed institutional investors also received warrants to purchase the same amount of shares at $2.50 apiece.

Vion's stock (NASDAQ:VION) dropped 25 cents Tuesday to close at $1.81, though Wednesday its shares gained 3.9 cents to close at $1.85.

The company reported about 29.3 million shares outstanding through June 30. Earlier that month, Vion raised $5 million through a sale of about 3.8 million common shares at $1.30 apiece, a deal that also included warrants for investors to purchase about 1.9 million more shares at $2.20 apiece.

New York-based Rodman & Renshaw acted as the latest transaction's placement agent.

As Vion uses the proceeds to fund ongoing operations, it plans to focus its efforts on continuing development of its anticancer agents.

Its clinical program includes Triapine, an inhibitor of ribonucleotide reductase, an enzyme important for DNA synthesis, and VNP40101M, a DNA alkylating agent. Vion reported Phase I findings on both products at this summer's American Society of Clinical Oncology meeting in Chicago.

Data from a trial of Triapine in combination with gemcitabine showed that Triapine achieves serum concentrations that are capable of enhancing gemcitabine activity in tumor cell lines. Initial data from a study of VNP40101M in leukemia showed a complete response in a patient with myelodysplasia and significant reduction or elimination of marrow blasts at the end of the first cycle in five patients, including resolution of leukemic gingival hypertrophy in one.

The company also plans to use the funds to continue preclinical development of second-generation Tapet vectors, modified Salmonella vectors used to deliver anticancer agents directly to tumors. In June, Vion halted development of its first-generation Tapet vector, VNP20009, after ending a Phase I trial to conserve funds.