By Randall Osborne

West Coast Editor

To keep plucking products by using what the Montreal-based company's CEO calls a "low-hanging fruit strategy," ConjuChem Inc. raised C$25.02 million (US$16.32 million) in its initial public offering.

"We create new drugs with existing drugs," said Duffy Dufresne, president and CEO of the firm, founded in 1997 on drug affinity complex (DAC) technology, a modification method that permanently attaches endogenous protein carriers to drugs in vivo.

The company sold 4.55 million shares at C$5.50 per share. Trading on the Toronto Stock Exchange under the symbol CJC, ConjuChem closed Thursday at C$5.50.

If underwriters exercise their overallotment option to buy 682,500 more shares, total gross proceeds of the offering will reach C$28.77 million. The lead underwriter is Yorkton Securities Inc., of Toronto, and participants include BMO Nesbitt Burns Inc., HSBC Securities (Canada) Inc., and National Bank Financial Inc., all of Toronto.

ConjuChem said it will use the proceeds mainly to pay for preclinical and clinical trials for its DAC products, as well as research and development expenditures, and capital asset expenditures, such as more laboratory equipment. General corporate expenses will take up the remainder.

Because the products designed through DAC have biological activities patterned after existing drugs, they can usually be developed more quickly, less expensively and at lower risk than new compounds, Dufresne said.

"It's kind of like a drug delivery technology, but there's no release mechanism, or anything like that," Dufresne told BioWorld Today. Full potency is preserved when reactive chemicals are linked to the drug, and when it's administered, the drug binds directly to a single albumin site - thus dramatically increasing its half-life.

Whereas the opioid, which is in Phase I studies, has a two-minute half-life by itself, when redesigned with DAC, its half-life jumps to 20 days. This means dosing of once or twice per month with DAC peptides, as opposed to "a sort of continuous infusion," Dufresne said.

The opioid is a naturally occurring, 13-amino-acid peptide, and a potent stimulator of opioid agonists, much like morphine, Dufresne said.

"But albumin doesn't cross the blood-brain barrier, so it has potent peripheral pain-relieving activity, but in animal models we've seen no centrally acting side effects that are the hallmark and principal drawback of narcotic opioids," Dufresne said.

Development of the DAC opioid, from concept to investigational new drug application, was only 19 months, he added, which is the likely average for future products by ConjuChem. Dufresne said he aims to turn into a "drug development machine."

The second lead product, in Phase I/II studies, is a local thrombin inhibitor, being developed to prevent clotting in peripheral bypass grafts and arterial-venous shunts. Dufresne said data from those trials are expected by the second quarter of next year.

After the offering, ConjuChem has about C$35 million in cash, with a net burn rate of C$7 million to C$8 million per year, Dufresne said.