By Brady Huggett

AtheroGenics Inc. completed a private placement and raised just more than $20 million to give itself financial elasticity.

The Atlanta-based company sold about 3.6 million shares at $5.75 per share to gross $20.6 million. JPMorgan H&Q, of New York, acted as placement agent for the financing. The investors included SAFECO Growth Opportunities Fund and Vulcan Ventures Inc., both of Seattle.

¿This $20 million was an opportunistic financing,¿ said Mark Colonnese, chief financial officer and vice president of finance and administration at AtheroGenics. ¿We were able to raise a significant amount of funds to advance our clinical programs. The funds will also give us the financial flexibility to possibly invest or acquire complementary technologies, products or businesses.¿

The $20 million-plus should power AtheroGenics for some time, Colonnese said.

¿We haven¿t really provided guidance to the Street regarding our current funding,¿ he said. ¿But at the end of the first quarter we had about $51 million in cash and we burned about $3 million in the quarter, so this gives us funding for the foreseeable future.¿

The $5.75 share value for the financing was a negotiated price, Colonnese said. AtheroGenics has about 27.5 million shares outstanding following the placement. Its stock (NASDAQ:AGIX) fell 31 cents Wednesday to close at $6.14.

AtheroGenics raised about $48 million in its initial public offering last August, selling 6 million shares at $8 apiece. It had registered to raise about $100 million in its prospectus. (See BioWorld Today, Feb. 29, 2000, and Aug. 10, 2000.)

AtheroGenics¿ lead product, AGI-1067, is partnered with Schering-Plough Corp., of Madison, N.J., in a deal potentially worth $189 million. (See BioWorld Today, Oct. 29, 1999.)

AGI-1067 is in the class called composite vascular protectants (v-protectants). It¿s an anti-inflammatory designed to inhibit the expression of VCAM-1 in the blood vessels and diminish atherosclerosis and restenosis. It also is an antioxidant. Colonnese updated its clinical progress.

¿We recently completed top-line results from our Phase II study, [Canadian Antioxidant Restenosis Trial] CART-1, for the treatment of post-angioplasty restenosis,¿ he told BioWorld Today. ¿We are evaluating the final results with our partner, Schering-Plough, to determine the next steps in that program.¿

The company has initiated a Phase I trial with its second v-protectant, AGIX-4207, for the treatment of rheumatoid arthritis, and it has several other v-protectant compounds in preclinical testing for varying anti-inflammatory indications, Colonnese said.

Colonnese said the $20 million puts the company at ease fiscally. The extra money should help generate further value for AtheroGenics, he said.

¿I think it gives us flexibility from a strategic standpoint to move our programs through clinical stages to value-creation points,¿ he said. ¿When you prove a compound is safe and can move to the next step, that is a value-creation point. The industry recognizes there are accomplishment milestones that create value. Product approval would be the ultimate one.¿