By Brady Huggett

Valentis Inc. raised about $13.8 million through the sale of shares to Wells Fargo Van Kasper, generating funds to continue progressing its products.

Burlingame, Calif.-based Valentis sold about 6.1 million shares to San Francisco-based Wells Fargo Van Kasper at $2.25 per share. After underwriting discounts, commissions and expenses, Valentis estimated in its prospectus net proceeds to be approximately $12.6 million. Following the sale, Valentis has about 36.2 million shares outstanding.

Valentis¿ stock (NASDAQ:VLTS) jumped 31 cents Friday, or about 11 percent, to close at $3.15. The company granted Wells Fargo an overallotment option on 919,501 additional shares.

Valentis said it plans to use the funds for general corporate purposes, which may include funding research, development and product manufacturing; increasing its working capital; reducing debt; acquisitions or investments in businesses, products or technologies complementary to its own; and capital expenditures.

As of Sept. 30, Valentis had about $28 million in cash, cash equivalents and short-term investments. It posted a net loss applicable to common stockholders for the third quarter of about $8.7 million, or 29 cents per share.

Valentis applies synthetic gene delivery, gene regulation and pegylation technologies to create therapeutic products based on genomic discoveries. Early in December, it suffered a setback of sorts when its IL-2 Genemedicine product in a late-stage head and neck cancer trial comparing the drug combined with chemotherapy to chemotherapy alone bottomed out. Although the interim results for the Phase IIb trial had shown a positive trend, when the final analysis was completed, that positive trend disappeared. Valentis¿ stock fell nearly 35 percent, or $1.43, closing at $2.67 on the day the news was released. (See BioWorld Today, Dec. 4, 2001.)

IL-2 Genemedicine is partnered with Roche Holdings Ltd., of Basel, Switzerland, with Roche supplying the interleukin-2 and Valentis providing the synthetic lipid delivery of the drug. The next step for the product and that indication is up to Roche, Valentis said at the time of the completed analysis.

Valentis rounds out its pipeline with a series of therapeutics. It has Del-1 ¿ a plasmid-based, synthetic gene therapy ¿ in Phase I trials for peripheral arterial disease, and intravenous IL-2 in Phase I studies for lung tumors and metastases. It has VEGF-165 in Phase II trials for coronary artery disease and peripheral arterial disease, as well as in Phase I trials for restenosis. Also, Valentis has IL-2 and Superantigen A for veterinary use in Phase II trials against solid tumors, and IL-2 and Superantigen B in Phase I trials for melanoma. And it has an IL-12 and IFN-alpha combination in Phase I studies for melanoma. It has several other products in preclinical studies.