By Randall Osborne
West Coast Editor
Aiming ¿ among other things ¿ to invigorate its metabolomics program, expanding the research into human health and nutrition, Paradigm Genetics Inc. said it has entered into an arrangement to place 5.1 million shares at $5.50 per share, which will raise $28 million.
¿We¿ve been the world¿s leader in developing metabolomics over the past four years,¿ said Paradigm President and CEO John Ryals, noting that the firm has spent between $20 million and $25 million on the effort.
¿We measure the small molecules in a cell or organism in a kind of snapshot, looking at things like metabolites,¿ he said. ¿There may be 36,000 genes, but there are only 2,500 small molecules, and all that metabolic activity comes down to what happens in terms of biochemical flux.¿
The company has ¿been using it on plants and fungi over the past years, and we started looking at humans over the past year and a half,¿ Ryals told BioWorld Today. ¿We¿ve been kind of keeping it under wraps. Now it¿s time to start showing people what it can do.¿
The financing deal, with JP Morgan H&Q, of New York, is pursuant to September¿s $75 million shelf registration and is expected to close by next Monday. Proceeds also will also be applied to increasing business development and meeting ongoing needs for capital.
¿We¿re not going into a lot of debt spending,¿ Ryals said. ¿We just wanted to strengthen the balance sheet going forward. This secures maybe three years of running money, and may take us through to profitability.¿
Paradigm has about $55 million in cash, and its burn rate was ¿in the high teens this year, and next year will be somewhat less,¿ Ryals said.
Metabolomics, he said, is ¿as robust as gene expression profiling, and much more informative. You don¿t know what the genes on the chip are, most of the time, with GEP. It¿s different with metabolites.¿
Focused on functional genomics, Paradigm Genetics aims its research at human health, nutrition, crop production and industrial products, using what it calls the GeneFunction Factory, an ¿industrial-scale¿ laboratory.
In June, Bayer AG, of Leverkusen, Germany, and Paradigm extended and expanded their research agreement to develop herbicides. The five-year deal, worth up to $30 million including milestones, extends the $40 million agreement signed by the companies in 1998. Paradigm also will get fees for all products developed that reach the market. Earlier this week, Paradigm said it delivered to Bayer a new package of assays for use in its high-throughput screening platform for the identification of herbicides, which triggered an undisclosed milestone to Paradigm. (See BioWorld Today, June 20, 2001, and Nov. 3, 1998.)
Paradigm¿s stock (NASDAQ:PDGM) closed Tuesday at $5.55, down 57 cents.