Hyseq Pharmaceuticals Inc. completed a private placement to raise $15 million in gross proceeds, money that will be used to fund the its continuing evolution from a tools company to a drug discovery and development company.
Hyseq, of Sunnyvale, Calif., sold 3,575,691 million shares of common stock at $4.20 per share to undisclosed accredited investors.
Hyseq’s stock (NASDAQ:HYSQ) fell 23 cents Tuesday to close at $3.96.
“The money will be used to develop drugs from our proprietary gene database, and also for our recent collaboration with Amgen for alfimeprase, which will be entering Phase I trials this quarter,” said Peter Garcia, senior vice president and chief financial officer of Hyseq.
In January, the company acquired the thrombolytic alfimeprase from Amgen Inc., of Thousand Oaks, Calif. It is a derivative of the fibrolase enzyme and is being developed to treat peripheral arterial occlusions. The agreement calls for Hyseq to fund development up to a certain amount, after which it’s a 50-50 funding arrangement, Garcia said. (See BioWorld Today, Jan. 10, 2002.)
All of Hyseq’s other potential drug candidates are in the preclinical stage, he said.
“There are interesting candidates in cancer and blood growth factors,” Garcia said.
The company began the year with $12 million in cash, and combined with a $20 million line of credit from Chairman George Rathmann and this latest financing, Hyseq should have enough money to last through the first quarter of 2003, Garcia said.
After the financing, the company has about 23 million shares outstanding, he said.
In addition to the stock, Hyseq issued warrants to the investor to purchase about 893,927 shares of stock at $5.67 per share, a 35 percent premium to the per-unit purchase price. The warrants are exercisable after six months, and then run to five years, Garcia said.
Hyseq’s CFO also said that the interest in the company from investors in this latest financing was reassuring. The company was founded in 1992 and became operational in 1994.
“We will continue to broaden our base of biotechnology institutional investors,” Garcia said, explaining that this is “extremely important.”
“The infusion will help us to meet our goals this year, allowing us some breathing room in a market that is hard to figure out on a day-to-day basis,” Garcia said.
In October, Hyseq, which started out with a focus on DNA probes, changed its name from Hyseq Inc. to Hyseq Pharmaceuticals Inc. to emphasize its new focus on drug discovery and development. It also formed a new subsidiary to focus on the development and commercialization of its sequencing-by-hybridization technology and entered a collaboration to develop a high-speed DNA sequencing chip. The new subsidiary is called Callida Genomics. In turn, Callida created a wholly owned subsidiary known as N-Mer to develop the chip that could sequence 10,000 bases of DNA at a time. (See BioWorld Today, Oct. 26, 2001.)