By Brady Huggett
Palatin Technologies raised $10.8 million in a private placement and said it will use the funds to shed the image of a one-product company.
"The company is going through a repositioning," said Carl Spana, CEO of Palatin. "We are trying to move into being a multiple-product company."
The investors in the round, divulged only as financial institutions based in Europe, purchased 1.8 million shares of common stock at $6 per share, the closing price for Palatin on Sept. 7. For every five shares purchased, the investors also received a five-year warrant to purchase one share of common stock at a 25 percent premium to the closing price. After the sale, Palatin has roughly 10.5 million shares outstanding, Spana said.
Palatin, based in Princeton, N.J., is best known for LeuTech, a monoclonal antibody labeled with technetium that is injected intravenously. The antibody moves to infection sites in the body, showing up brightly on gamma cameras, and has been proven effective in quickly diagnosing body infections, particularly appendicitis. LeuTech has completed Phase III trials, and Palatin filed a biologics license application in November 1999. Mallinckrodt Inc., of St. Louis, has signed on to handle the marketing of LeuTech. (See BioWorld Today, April 27, 1999, p.1; and May 17, 1999, p. 1.)
At the end of 1999, Palatin had approximately $8.3 million in cash and cash equivalents and was burning roughly $4.2 million per six months. Spana said the burn rate for Palatin won't change until the beginning of the second quarter of next year.
"We will spend about $700,000 to $800,000 net a month," Spana said. "We have around $15 million right now. This should last us about a year. We are not going to run out of money."
Sexual Dysfunction Product In Development
The company will use that money to push its second major product, PT-14, which is being developed as a treatment for erectile dysfunction but also has potential for female sexual disorder treatments. PT-14 stimulates sexual activity through the brain and can be self-administered through a non-penile injection for men, an advantage over some of its competitors, the company said. The estimated U.S. market for sexual dysfunction products is $1.5 billion. PT-14 is currently in Phase I /II clinical trials.
"We really plan on using the proceeds to push [PT-14] forward and to fill out our pipeline," Spana said. "LeuTech is paid for already."
Spana said the company is ready for the change.
"As the new CEO, my first step is to go out and say I'm here and I have a new direction for the company," Spana said, "which is to change it from a single-product company into a company with multiple products."
Palatin's stock (AMEX:PTN) closed Tuesday at $6.44, up 18.75 cents.