Central nervous disorder firm Neurochem Inc. secured C$8.15 million (US$5.22 million) through a private placement to a group that includes its chairman, an investment that could more than double if all warrants eventually are exercised.
Saint-Laurent, Quebec-based Neurochem raised the funds after selling 1.2 million units at C$6.79 apiece to a subsidiary of Picchio Pharma Inc., a joint venture between Francesco Bellini - Neurochem's chairman and newly appointed CEO - and Power Technology Investment Corp. - a subsidiary of Power Corp. of Canada. Bellini took on the additional role of CEO after replacing Louis Lamontagne, who said he would step down but remain on the board.
Each unit consists of one Neurochem common share and one warrant to purchase an additional common share anytime within a three-year period for C$7.81 - a 15 percent premium to the issue price of the units - for a total possible investment of C$17.52 million.
Neurochem said it would use the proceeds for working capital purposes as it continues to push its late-stage drug development programs as part of a growth initiative to move toward profitability. The company said its strategy points it to a product-driven business focused on development and commercialization. With its latest cash infusion, Neurochem said it has funding sufficient to last about a year and a half.
"It puts us in a comfortable position," Lise Hebert, Neurochem's director of communications and investor relations, told BioWorld Today.
As of Sept. 30, the end of its most recent quarter, Neurochem reported cash, cash equivalents and marketable securities of C$27.2 million. It also reported revenues of C$253,000 but a net loss of about C$3.96 million for the quarter, compared to year-earlier-quarter revenues of about C$1.51 million and a net loss of C$1.66 million. Neurochem blamed the revenue loss primarily on the discontinuance of a research contract with Copenhagen, Denmark-based H. Lundbeck A/S, while it attributed the climb in net loss to increased research and development expenses associated with added clinical trial costs.
If Montreal-based Picchio exercises all its warrants, it would hold nearly 31 percent of Neurochem's common shares on a fully diluted basis. Picchio earlier this year made an initial C$7 million investment in Neurochem, purchasing 2.8 million units at C$2.50 apiece. At the time, the deal assured Picchio of a 24 percent stake in Neurochem if it exercised all of its warrants. It now is Neurochem's largest shareholder.
Bellini joined Neurochem's board in conjunction with the first investment.
The transaction is subject to Neurochem disinterested shareholder approval and other customary closing conditions.
Its clearest path to commercialization could come from Fibrillex, its most advanced product candidate. At a shareholder meeting the same day, Neurochem said it completed enrollment of the 150 patients required for its pivotal Phase II/III trial of the drug. The patients have been recruited in 27 North American, European and Israeli sites. Fibrillex is being developed to treat secondary amyloidosis, a disease for which no cure exists and that often results in kidney failure and other conditions.
"The primary endpoint is a composite assessment of kidney and gastrointestinal functions," Hebert said. "This is a two-year study, so by December 2004 the trial should be completed."
Development of Fibrillex, which has received orphan drug status in the U.S. and Europe, is partially funded by a US$1 million grant from the FDA, Hebert said.
Neurochem's other late-stage programs have shown promise as well.
Earlier this month at the Society for Neurosciences meeting in Orlando, Fla., Neurochem reported results showing that its compounds have the potential to alter not only the course of Alzheimer's disease, but also be effective in slowing the development of cerebral amyloid angiopathy. The company said such results support its candidates' potential to stop amyloid deposition in the afflictions.
"They are both new classes of drugs, so they are not part of a symptomatic class of drugs but aim to be a disease modifier," Hebert said.
Its Alzheimer's disease treatment candidate, Alzhemed, has advanced into a Phase II trial aimed at determining optimal dosing regimens for subsequent efficacy trials. The study also will measure the amyloid protein levels in the plasma and spinal fluids of participants.
Alzhemed was the source of the dropped funding from Lundbeck, which more than a year ago discontinued the companies' research collaboration. But Neurochem said it received about three-quarters of the total funding it would have received had the collaboration played its course. (See BioWorld Today, Oct. 15, 2002.)
Its Cerebril product, designed to treat hemorrhagic stroke due to cerebral amyloid angiopathy, also has advanced to Phase II. The study will evaluate the optimal dosing regimens for subsequent efficacy trials and monitor patients' stroke condition by MRI.
Deeper in its pipeline, Neurochem's preclinical portfolio includes a product candidate to treat amyloid-associated Type II diabetes and a program to treat recurrent seizures induced by traumatic brain injury.
Neurochem's stock (TSE:NRM) on Thursday climbed C37 cents to close at C$7.95.