By Brady Huggett

Trading of Waratah Pharmaceuticals Inc. stock on the Canadian Venture Exchange began Wednesday after the closing of its initial public offering in which the company raised C$8.5 million (US$5.7 million) by issuing 10 million shares at C85 cents each.

The company's stock (CDNX:WAR) gained 176.5 percent Wednesday, closing at C$2.35 in trading of about 14.5 million shares. The company has 23.7 million shares outstanding.

"We built a company around credibility, and have been very careful to develop the right kind of expectations for it," said Luc Mainville, vice president and chief financial officer. "But we are working in an area that has great potential and we think that is what the market is showing today."

Yorkton Securities Inc. acted as lead agent for the offering and Canaccord Capital Corp. acted as co-agent. There is an overallotment option of 1.5 million shares at C85 cents each until the close of business Nov. 4.

The offering also qualified 4 million common shares and 4 million warrants underlying special warrants previously issued by Waratah.

Waratah, of Calgary, Alberta, is a spin-off of RTP Pharma, a biopharmaceutical company based in Montreal. RTP obtained patent rights to and funded the work of Steve Brand, eventually approaching him to found Waratah, and in return, RTP gained equity in the spin-off. Its equity position is 24 percent.

The company develops products for its islet neogenesis therapy (INT) for the treatment of insulin-deficient diabetes. The intent is to regenerate insulin-producing cells in the patient's pancreas by reactivating islet neogenesis - the process in which islets are formed during fetal development. An alternative method of treatment is islet cell or pancreas transplant.

Waratah plans to use the proceeds for the development of its products and also to complete necessary animal studies for an investigational new drug application, required for the initiation of human studies.

"We have enough cash that will be sufficient to bring us into the human trials," Mainville said. "As a newly public company, we will probably go back to the market to add to that cash."