Looking to bolster cash reserves as it continues late-stage development of its lead products, Pain Therapeutics Inc. registered with the SEC for a follow-on stock offering that could raise about $51.6 million.
The South San Francisco-based company filed to sell 7.7 million common shares, and could add another 1.1 million if the underwriters exercise their overallotment option in full. Exercise of the option would raise the total to $59 million, if the shares sold at Thursday's $6.70 closing price of Pain Therapeutics' stock. On Friday, its shares (NASDAQ:PTIE) dropped 9 cents to close at $6.61.
"I think there is a renewed interest in late-stage products among institutional investors," Pain Therapeutics President and CEO Remi Barbier told BioWorld Today. "I think there is a realization that real economic value is created from products, and not from tools, services and so forth."
The underwriting group includes New York-based Citigroup Global Markets Inc. as the leader, with additional management from CIBC World Markets Corp., of New York; Leerink Swann & Co., of Boston; and ThinkEquity Partners LLC, also of New York.
Pain Therapeutics said it would use net proceeds for general corporate purposes, including research and development, expansion of its commercial infrastructure, acquisition of complementary technologies or products and working capital. The company reported $42.5 million in cash and cash equivalents through the quarter ended June 30, along with 27.3 million shares outstanding. It lost $4.3 million in the period.
Pain Therapeutics' lead product, Oxytrex, entered Phase III studies in late June. The 700-patient study is designed to evaluate the painkiller's ability to treat chronic, severe low-back pain. Given positive results, the company said it would file for FDA approval of a broad label for Oxytrex, a combination of immediate-release oxycodone and low-dose naltrexone. Enrollment in the trial was expected to take about a year. (See BioWorld Today, July 1, 2003.)
At the beginning of the year, Pain Therapeutics entered a partnership to develop a longer-acting formulation with Cupertino, Calif.-based Durect Corp. (See BioWorld Today, Jan. 15, 2003.)
Another late-stage product, PTI-901, is designed to treat pain associated with irritable bowel syndrome. In its prospectus, Pain Therapeutics said it expected a fourth-quarter start to Phase III studies of the small molecule, which has been shown to effectively treat the ailment in both men and women. The company noted that there are no FDA-approved drugs to treat irritable bowel syndrome in men, and only two for women.
Pain Therapeutics said it believes that if approved, both drugs would enter markets that exceed $1 billion annually.
The company also plans to release news during the fourth quarter related to an undisclosed pain management drug candidate that is expected to enter a Phase III program within a year. Pain Therapeutics owns all commercial rights to all three products.
"In general, there is an interest in companies that have a high likelihood of making money in our lifetime," Barbier said. "I think companies that have a clear shot at making money and own products, especially products that target blockbuster markets, are in a very sweet position right now."