By Matthew Willett
Magainin Pharmaceuticals is selling 4.1 million shares of common stock to private investors at $3 per share, grossing the Plymouth Meeting, Pa.-based company $12.4 million.
Paramount Capital Inc. acted as financial adviser for the transaction, which included new investors as well as its largest institutional shareholder, the State of Wisconsin Investment Board.
The shares were sold at a discount. The company's stock (NASDAQ:MAGN) closed Friday at $3.281, down 9 cents.
Michael Dougherty, president and CEO, said the financing is an encouraging response for the company, which last year saw one compound rejected by the FDA. (See BioWorld Today, July 27, 1999, p. 1.)
"We're very pleased with the response of investors for this offering," he said. "Magainin has undergone an extensive repositioning of our business over the last year. Historically, our company has focused on topical antibiotic products, and Locilex, last year at about this time, did not receive approval from the FDA. Over the last 12 months we've focused on our antiangiogenic program for squalamine and on our respiratory genomics program. We've kind of backburnered the Locilex program."
He said the company will use the funding for product advancement as well as for general corporate purposes.
"As of June 30 we had $12.2 million in cash, and this financing of $12.4 million . . . effectively doubles our cash. Historically, our burn rate has been about $10 million per year, so for the first time in quite some time the company has about two years worth of cash in the bank," Dougherty said.
Magainin is testing squalamine in Phase II trials in combination with chemotherapy for non-small-cell lung cancer. Dougherty said the company expects it would be in a position to file a new drug application in 18 to 22 months if data are positive.
"We're conducting several different clinical studies," Dougherty said. "Our first Phase II was a clinical study with an indication for non-small-cell lung cancer, and we expect data from that Phase II trial at the end of this year," he said, adding that other studies are being conducted, including one for squalamine in ovarian cancer.
Other products in the company's pipeline, including the potential asthma treatment IL-9, remain in the preclinical research stage, he said.
Magainin entered a research and option partnership with Genentech Inc., of South San Francisco, last year to evaluate the IL-9 antibody. The deal included a $2 million Magainin stock buy by Genentech. Genentech also agreed to pay up to $35 million to Magainin if Genentech decided to pursue development of the compound.
"We've refocused the business," Dougherty said, "And we had a tough 1999, but we think we've put a lot of value in our respiratory genomics program and the antiangiogenic program, and it's nice to see investors respond to the company."