By Randall Osborne
West Coast Editor
With one drug on the market, InKine Pharmaceutical Co. said it will use $10 million from a private placement to push ahead with its pivotal trial with Colirest, a treatment for Crohn¿s disease ¿ and will study the oral steroid in ulcerative colitis as well.
After the placement of 5.5 percent convertible subordinate notes due June 2003, along with warrants, with SAC Capital and SDS Capital Partners, InKine has about $18 million in cash, said Robert Apple, chief financial officer of Blue Bell, Pa.-based InKine.
¿The first pivotal study will cost about $6 million,¿ Apple said. ¿This leaves us some breathing room. It puts us in a good position. We expect to be cash-flow positive by the end of this year, and profitable by 2002.¿ With 20 employees, InKine has been trying to ¿maintain a moderate level of employees, and keep a semi-virtual model going,¿ he added.
The notes are convertible into InKine common stock (NASDAQ:INKP) at $4.52 per share. That¿s a 10 percent premium to Friday¿s closing price. InKine¿s stock ended Monday at $4.09, down 1 cent. The warrants were priced at a 20 percent premium to the conversion price.
Proceeds also will be used as working capital, and for general corporate purposes.
Tucker Anthony Sutro Capital Markets, of Boston, was the lead placement agent, and Leerink, Swann & Co., also of Boston, was the co-placement agent.
Colirest, which has been shown in earlier studies to lack the side effects of other steroids, may prove useful in ulcerative colitis (which is the subject of the next trial) and in other inflammatory, autoimmune diseases, such as rheumatoid arthritis, Apple said.
¿The drug that we use is not patentable in rheumatoid arthritis,¿ he noted. ¿The compound itself is generic, and we have to go with what we can protect.¿
The FDA agreed in February to let InKine proceed with Phase III trials using Colirest, and the first trial ¿could start as early as this quarter,¿ Apple said. (See BioWorld Today, Feb. 28, 2001.)
Last September, the agency approved Visicol, InKine¿s first product: a colon cleansing agent for patients undergoing colonoscopy, launched in 2001. (See BioWorld Today, Sept. 22, 2000.)
¿We had a good first quarter [with $1.6 million in net sales],¿ Apple said. ¿We hope to have the same for the second quarter.¿ He said doctors ¿have been using the same products for 10 or 12 years¿ for colon cleansing ¿ mainly, a cherry-flavored liquid that patients in trials found much less pleasant than the Visicol pill.
¿We¿ve been able to get the feet on the street,¿ and get the calls to the doctors,¿ Apple told BioWorld Today. ¿Our product seems to have filled the niche from the patients¿ standpoint.¿