By Karen Young
Stressgen Biotechnologies Corp. entered into an agreement with a syndicate of underwriters to sell 6 million common shares at C$4.15 per share for gross proceeds of C$25 million (US$15.9 million).
The syndicate of underwriters is co-led by Raymond James Ltd., of Vancouver, British Columbia, and BMO Nesbitt Burns Inc., of Vancouver, and includes Yorkton Securities Inc., of Toronto. The syndicate also will have the opportunity to purchase up to an additional 2.4 million common shares at the same price, which could add another C$10 million to the financing. The financing is expected to close on or about Dec. 20.
Stressgen¿s stock (TSE:SSB) fell C21 cents Tuesday to close at C$4.14.
¿I think that given the financial market, it gives us a little more breathing room,¿ said Donald Tartre, vice president and chief financial officer of the Victoria, British Columbia-based company.
At the end of the third quarter, Stressgen had C$47.4 million in cash. Tartre said that based on the company¿s current burn rate of C$3 million a month, after the financing it should be able to continue 18 to 21 months, depending on how much of the underwriters¿ option is picked up.
Stressgen is involved in conversations with several pharmaceutical companies regarding partnerships for its lead product, HspE7, Tartre said. The new financing will be used to continue clinical trials for HspE7, which Tartre called a ¿broad spectrum drug¿ that can address multiple indications, as well as to advance other product candidates through development.
The company has several Phase II trials under way for HspE7, including for cervical dysplasia and recurrent respiratory papillomatosis. A Phase II trial for genital warts and anal dysplasia was recently completed. Final results of the high-dose study in patients with high-grade anal dysplasia at six months demonstrated a 75 percent reduction from high-grade dysplasia, a precursor to anal cancer, to low-grade dysplasia. Final results of the high-dose study in patients with genital warts at six months demonstrated a 53 percent median reduction of wart area vs. 16 percent with placebo.
Stressgen has an ongoing Phase III study of the drug in anal dysplasia.
HspE7 is a recombinant fusion product composed of heat shock protein 65 from Mycobacteria bovis BCG fused to the protein E7. E7 is an antigen derived from HPV.
Tartre said the company¿s next lead product candidate is for hepatitis B, which is still in preclinical studies. An investigational new drug application for that candidate likely will not be filed until the end of 2003, Tartre said.
Stressgen also is conducting research in herpes simplex virus, as well as HIV.