West Coast Editor
Cardiome Pharma Corp. President and CEO Robert Rieder said the company not only finished its planned merger of Paralex Inc. “according to script” but separately raised $19.5 million to push both firms’ heart products through development.
The merger of Vancouver, British Columbia-based Cardiome and Paralex, of New York, came through Cardiome’s issuance of 32.8 million units to privately held Paralex, in a deal valued at between “$12 million and $15 million in U.S. dollars,” Rieder said.
Each unit consisted of one common share and one-quarter of a common-share purchase warrant, with each whole warrant exercisable into a share at a price of $1.66 per share, until March 8, 2004.
Cardiome’s stock (TSE:COM) closed Monday at C80 cents, down 3 cents.
The firm’s public offering entailed 37.23 million shares at C83 cents each, raising the equivalent of about US$19.5 million, he added.
“The minimum [targeted] financing was US$10 million,” Rieder told BioWorld Today. “That was required to drive our two Phase II programs and provide two years of cash. It was a three-and-a-half-month process, and during that time the markets kind of went to hell, which made the completion of the financing at the maximum an even sweeter result.”
Cardiome disclosed the merger deal late last year, detailing its plan to acquire Paralex, gaining intellectual property related to cardiovascular applications of xanthine oxidase inhibitors (licensed from Johns Hopkins University), plus an option to acquire a Phase III drug candidate from the same category for gout. (See BioWorld Today, Dec. 24, 2001.)
Xanthine oxidase inhibitors work by sensitizing cardiac muscle cells to calcium ions, a key determinant of cardiac muscle function. The congestive heart failure drug bought in the deal is Oxyprim (oxypurinol), which is the active metabolite of allopurinol, currently manufactured and sold as a gout drug by about 20 firms worldwide, including London-based GlaxoSmithKline plc, under the trade name Zyloric.
Proceeds from the offering will be used to push Oxyprim and Cardiome’s arrhythmia drug, RSD1235, through the clinic.
“We’re at the Phase II stage with both of them, and with both of those markets there’s significant opportunity for an oral drug and an [intravenous] drug,” Rieder said. The $10 million originally sought in the financing “was sufficient to drive oral Oxyprim, and enough to fund the [intravenous] application of RSD1235. Now, one of the obvious places to add value more quickly is through mirror-image’ applications in both cases,” developing an oral and intravenous form of each, he added. “There’s a potential to do additional work on the intravenous version of Oxyprim and the oral of RSD.”
By mid-year, the company expects to conclude patient enrollment for the Phase II trial of intravenous RSD1235 in patients with new-onset atrial fibrillation. A Phase II trial with Oxyprim to improve cardiac performance in patients with congestive heart failure is expected to begin in the second half of 2002.
The financing may allow for accelerating the Phase I oral clinical trial for RSD1235 and the additional work with Oxyprim, Rieder said.
“For under $3 million, we can move a long way,” he said. “It’s not a huge amount of money, but then we take the second step: broad Phase II studies. I think they would be next year; we have to make the decision to go on it yet. These seem like fairly obvious decisions, but we need to sit down as a group and take advantage of our external advisers.”
The merger promises more benefit for Cardiome as it seeks further financing, Rieder said.
“So many fund managers can’t invest in a stock even if they like it, if the market cap is too low, and it’s an institutional market these days,” he said. Cardiome’s market cap is now between $55 million and $60 million, he said.
Toronto-based Sprott Securities Inc. and Raymond James Ltd., of Vancouver, acted as agents in connection with the offering, and Paramount Capital Inc., of New York, assisted in the private placement of units in the U.S. The offering includes 8.17 million units issued under an overallotment option.