ISTA Pharmaceuticals Inc. secured $40 million in equity financing, in addition to a $4 million bridge loan, money that will enable the company to continue clinical trials in late-stage products.
ISTA, of Irvine, Calif., plans to submit a new drug application for its lead candidate, Vitrase, to the FDA in visual acuity before the end of the quarter, said CEO Vicente Anido. The money also allows the company to complete a reverse stock split at a ratio of between 1-for-7 and 1-for-10.
"This financing will allow us to do the reverse split, which will get the stock well beyond a dollar again," Anido told BioWorld Today. "We will have money in the bank so we have enough for operations for quite awhile."
ISTA's stock (NASDAQ:ISTA) rose 15 cents Thursday, or 51.7 percent, to close at 44 cents.
The equity financing was led by The Sprout Group, of Menlo Park, Calif., and New York; Sanderling Venture Partners, of San Mateo, Calif.; and Investor Growth Capital, of Palo Alto, Calif. The investors have agreed to purchase $40 million of common stock and will receive warrants to purchase an additional $6 million of stock, the company said, with a per-share price of both stock and warrants at 38 cents. That price represents a 31 percent premium to the Wednesday closing price of 29 cents, the company said.
With the bridge loan, the company said, investors agreed to purchase $4 million in senior secured convertible promissory notes that mature on Dec. 31, 2002, and are convertible into common stock at 38 cents per share subject to ISTA shareholder approval. Along with that, the investors received warrants to purchase $1 million in ISTA stock that is exercisable immediately at a price of 38 cents per share.
The meeting of shareholders is scheduled to take place in mid- to late October, Anido said.
Anido said the company had made investors aware that it would run out of cash by the end of the third quarter, so this financing comes at the perfect time. The $40 million should carry the company through mid-2004, he said.
In the meantime, the company has plans for clinical trials. Before the end of the third quarter, with a rolling NDA for Vitrase, the company plans to submit the clinical and one other portion of the application, Anido said. Vitrase has orphan drug status.
ISTA had originally submitted an NDA for Vitrase for treating vitreous hemorrhage, but the drug missed its primary endpoint in two pivotal Phase III studies in March. Still, the company said in April that the FDA had notified it that the company could still submit the NDA with visual acuity considered as the primary endpoint in the pivotal trials. (See BioWorld Today, March 27, 2002, and April 11, 2002.)
In May, the company acquired certain rights to three late-stage ophthalmology compounds from AcSentient Inc., of Research Triangle Park, N.C. ISTA's partner, Senju Pharmaceutical Co. Ltd., of Osaka, Japan, plans to submit an NDA for one of those compounds, timolol, a beta-blocking agent for treating glaucoma, by the end of the third quarter. (See BioWorld Today, May 7, 2002.)
With another of those compounds, bromfenac, ISTA has one more Phase III trial to conduct, which it expects to finish in the third or early fourth quarter of 2003. That would pave the way for an NDA filing before year-end 2003, Anido said. Bromfenac is a topical nonsteroidal anti-inflammatory compound for the treatment of ocular inflammations.
The third compound, Caprogel (aminocaproic acid) for the treatment of hyphema, is slated for a Phase III trial to begin in the late first or early second quarter of 2003 and be completed by the end of next year, followed by an NDA filing by year-end, Anido said.
"With a little bit of luck, this financing, in addition to getting those drugs approved, may take us to cash break-even by the end of 2004," Anido said.