Canadian firm Isotechnika Inc. completed a US$15 million private placement with U.S. institutional investors.
Located in Edmonton, Alberta, Isotechnika views this first U.S.-only financing as testament to the validity of its science and product pipeline.
"We're absolutely pleased about what's happened here because it accomplishes two things. First, it puts the money in the till to be able to move the more novel drugs along, but equally important is strategically, it moves us into the larger U.S. market, a market we definitely want to be in," Robert Foster, Isotechnika's chairman and CEO, told BioWorld Today. "These institutional investors are highly qualified and familiar with the biotech space, so they're not just any old institutional fund."
Banc of America Securities LLC, of New York, served as lead placement agency, with Friedman, Billings, Ramsey & Co. Inc., of Arlington, Va., acting as co-manager.
In total, $15 million in gross proceeds was raised through the sale of about 6.5 million newly issued common shares at US$2.32 per share. Investors received approximately 1.3 million warrants on the basis of one warrant for every five common shares purchased. Each warrant entitles the holder to acquire one additional common share at C$4.49 (US$3.19) per share, exercisable within a three-year term.
The news was disclosed Thursday. Isotechnika's shares (TSE:ISA) fell C15 cents Thursday to close at C$3.50, but gained C13 cents Friday to close at C$3.63.
Capital raised will be used for general corporate purposes, including the development of TAFA93, an immunosuppressive compound likely to enter Phase I studies in 2004, Foster said.
TAFA93 is a novel small-molecule mTOR inhibitor, a class of drugs used in the prevention of organ rejection in transplantation and as a coated stent therapy in the treatment of coronary artery disease. Potentially, it may be used in combination with Isotechnika's lead compound, ISA247, an immunosuppressant that completed a Phase II psoriasis trial and a Phase IIa trial in kidney transplantation. The candidates have different mechanisms of action.
ISA247, a calcineurin inhibitor, will enter a Phase III for psoriasis and Phase IIb in kidney transplant patients fresh out of surgery, in the second half of 2004. The Phase IIa was in a more stable group of kidney transplant patients who had had surgery at least six months prior.
ISA247 is being developed via a collaboration with Basel, Switzerland-based F. Hoffmann-La Roche Ltd. (See BioWorld Today, May 19, 2003.)
The Roche deal eventually could mean up to US$215 million for Isotechnika, which is receiving license fees and development and commercial milestones along the way.
In fact, Foster said Roche payments help drop the company's net burn rate to US$3.5 million to US$4 million annually. (Roche is paying 70 percent of research and development costs.)
Following the $15 million financing, Isotechnika had about US$73 million to US$75 million in cash.