EntreMed Inc. reached an agreement to raise gross proceeds of $10.25 million through a private placement of equity.
The Rockville, Md.-based firm on Friday said it would sell 4.1 million common shares at $2.50 apiece, about a 15 percent discount to Thursday's closing price of its shares. The company's stock (NASDAQ:ENMD) fell 35 cents Friday to close at $2.52, though just days before the shares swelled by 155 percent on positive preclinical news on its experimental anticancer drug Panzem.
Upon completion of the sale, EntreMed said it would issue warrants to the institutional investors to purchase up to an additional 1.025 million shares at an exercise price of $3.375 apiece.
Officials at EntreMed declined to provide additional details on the financing, though in its release the company said it would use the funds for further development of Panzem (2-methoxyestradiol), as well as for additional work on compounds in its small-molecule and peptide programs. But its anticancer compound seems to be turning the most heads these days.
Already in a Phase I program, preclinical news on Panzem sent the company's stock soaring from $1.08 to $2.75 Tuesday. EntreMed said data published in this month's Cancer Cell showed that Panzem's antitumor and anti-angiogenesis activity is dependent on the small molecule's ability to inhibit both microtubules and HIF (hypoxia inducible factor 1). Specifically, the study demonstrated that Panzem affects microtubules at concentrations achievable in vivo that result in profound antitumor and anti-angiogenesis effects.
Microtubule disruption results in the down-regulation of HIF-1 alpha, which is overexpressed in more than 70 percent of human cancers and their metastases, including breast, prostate, brain, lung and head and neck cancers.. While that effect is not unique to Panzem, EntreMed said Panzem is a more potent HIF inhibitor when compared to preclinical models of Taxol or vincristine.
In clinical news released at last year's American Society of Clinical Oncology meeting, EntreMed reported observations of Panzem's anticancer activity, notably disease stabilization and declining prostate-specific antigen levels in hormone-refractory prostate cancer patients in a Phase II trial. Data also showed that the oral drug was safe, well tolerated and demonstrated signs of inhibiting blood vessel growth.
Other positive data have been reported from studies in other cancers as well.
The company also is investigating the drug outside of cancer. HIF also is associated with diseases of the bone and diseases that are mediated by inflammation, such as rheumatoid arthritis. Last month's issue of Endocrinology published preclinical findings on Panzem's use in preventing and treating osteoporosis. And in January of last year, EntreMed entered a $40 million-plus agreement with Irvine, Calif.-based Allergan Inc. to develop Panzem for age-related macular degeneration.
The company laid off more than half of its 115 employees late last summer, with cutbacks reported in August and September. At the time EntreMed said it planned to reduce net operating expenses by 60 percent to about $12 million for this year.
Last month EntreMed reported a year-end net loss of $39 million for the period ended Dec. 31. The company closed out its year with $24.1 million in cash and cash equivalents. It reported 21.9 million shares outstanding as of Dec. 31.