By Brady Huggett
Adolor Corp. entered a definitive purchase agreement to sell 3 million shares of newly issued stock to institutional investors for total proceeds of $60 million.
Adolor, of Exton, Pa., will use some of the funding for its post-operative ileus drug in Phase III trials.
¿We will use the funds to continue the development of our lead product, ADL 8-2698, and to further expand our peripheral Kappa analgesics,¿ said Peter Schied, vice president and chief financial officer at Adolor.
Adolor had about $125 million in cash and cash equivalents as of March 31. The 3 million shares involved in the private placement give Adolor approximately 31 million shares outstanding. The $20-per-share price was reached by figuring a slight discount to a five-day volume weighted average, Schied said.
Adolor¿s stock (NASDAQ:ADLR) fell $1.37 Wednesday to close at $21.68.
Schied said Adolor preferred not to disclose the investors involved, but he said they are ¿very high quality,¿ from both the United States and Europe and have known the company ¿for some time.¿
ADL 8-2698 is a peripherally acting mu opioid receptor antagonist designed to treat or prevent narcotic-induced constipation by inactivating mu opioid receptors in the colon. The drug allows the gastrointestinal organ to function normally when patients receive therapeutic doses of morphine, codeine or other narcotic analgesics on an acute or chronic basis. The product began Phase III enrollment in March. (See BioWorld Today, March 20, 2001.)
¿The enrollment is proceeding according to plan for the first indication ¿ post-operative ileus ¿ and the Phase III for the second indication will begin in a few weeks,¿ Schied said. ¿The second indication is for opioid bowel dysfunction.¿
If all continues well, Schied said the company might file a new drug application for ADL 8-2698 in post-operative ileus by mid-2002.
Adolor raised $90 million in an initial public offering in November through the sale of 6 million shares at $15 per share. (See BioWorld Today, Nov. 15, 2000.)
Besides providing funding for trials, the private placement gives Adolor additional financial stability and negotiating clout.
¿We were previously covered through the end of 2002, without funds from any other resource, so [the funding] extends that,¿ Schied said. ¿It strengthens our negotiating position for prospective co-promotion partners.¿ Schied said negotiations for a partner were under way.
Also, Schied said the placement speaks of Adolor¿s position.
¿This was a clear indication of the strength of the company to get a unique PIPE [private investment in public entity] done in this type of market,¿ he said.