National Editor

To advance its immune-modulation therapy in patients with advanced chronic heart failure, Vasogen Inc. raised $37.5 million in a private placement, selling 9.375 million shares at $4 each.

"It will be primarily for the Phase III trials," said David Elsley, president and CEO of Mississauga, Ontario-based Vasogen. The FDA late last year cleared Vasogen to begin the studies. (See BioWorld Today, Nov. 20, 2002.)

"They're just being initiated as we speak," Elsley said Thursday. The study will enroll 2,000 patients. A Phase III trial testing the therapy in peripheral vascular disease is "well under way," he added.

Immune-modulation therapy is described as a 20-minute outpatient procedure involving the stressing of a small sample of a patient's blood using a medical device, which triggers cell death in a small sample of immune cells. They are re-administered to up-regulate the immune system's normal anti-inflammatory response, reducing chronic inflammation, which is known to be strongly implicated in cardiovascular disease and heart failure.

The peripheral vascular disease study in 500 patients is expected to yield data in the first quarter of next year, Elsley said. The heart failure study is expected to enroll in 15 months and report data in the first half of 2005.

Vasogen said also it will use the cash to put in the clinic a new technology for neuro-inflammatory disorders, and for general corporate purposes.

Published results on the neuro-inflammatory efforts suggest Vasogen's therapy crosses the blood-brain barrier and has anti-inflammatory activity, reducing cell death caused by lipopolysaccharide and increasing the anti-inflammatory cytokine IL-10, among other effects.

There also was a significant reduction in the expression of certain enzymes involved in the intracellular response to inflammation, including the stress-activated protein kinase c-Jun NH2-terminal kinase, Vasogen said.

"We're just completing the preclinical work and we're showing very striking results," Elsley told BioWorld Today. Clinical trials are expected to begin in 2004.

Added to current funds, net proceeds of the offering leave Vasogen with $54.8 million (C$74.1 million) in cash, enough to fund both of the Phase III programs, he said.

Participants in the private placement included strategic and financial investors, including Quest Diagnostics, of Teterboro, N.J.; WPG Farber Fund, of New York; AIG Global Investment, of New York; China Development Industrial Bank, of Taiwan; George Weiss Associates, of New York; Knott Partners, of New York; Oakmont Corp., of Los Angeles; Straus Asset Management, of New York; Sceptre Investment Counsel, of Toronto; and AGF Management, of Toronto. Needham & Company acted as placement agent for the offering.

Vasogen's stock (NASDAQ:VSV) closed Thursday at $4.85, up 10 cents.