By Lisa Seachrist

Washington Editor

Aiming to fund the clinical development of its complement inhibitor, Avant Immunotherapeutics Inc. raised $36.5 million in a private placement of 4.65 million shares of common stock with institutional investors.

The offering price of $7.85 per share represented a 7.6 percent discount to the closing price of the company's shares on Friday. PaineWebber Inc. served as the placement agent for the offering that included both U.S. and European institutional investors. The company currently has approximately 55 million shares outstanding.

"This really allow us to take Avant to the next stage," said Una Ryan, president and CEO of Needham, Mass.-based Avant. "These are very heady and exciting times for us around here."

The bulk of the funds raised in the private placement will go to further the clinical development of the company's complement inhibitor, TP10. The funds will serve to produce commercial-grade TP10 as well as fund the actual clinical trials of the product.

TP10 is designed to halt the inappropriate activation of the complement cascade following cardiac surgery. The company is in the process of completing Phase II clinical trials of the drug in infants undergoing cardiac surgery, and intends to initiate a pivotal study in infants by the end of this year.

Complement activation can impair the functions of the heart, lungs and other organs as a result of exposure to a heart-lung machine and as a result of stopping and restoring circulation. For infants who need cardiac surgery to repair abnormalities in the heart, such as holes in the septum and transposition of the large blood vessels leading to and from the heart, exposure to a heart-lung machine triggers the complement cascade. As a result, these babies' blood vessels become leaky and the infants swell to the point surgeons must leave their chests open for several days. TP10 can inhibit this swelling and lessen the risk of the surgery.

In addition, the company plans to start Phase II studies of TP10 this year in adults undergoing cardiac surgery. Adults undergoing cardiac surgery don't typically swell as dramatically as infants, but they do suffer from reversible cognitive deficits caused by leaky blood vessels. Avant will be testing TP10's ability to prevent this cognitive deficit, indelicately known as pump head, as well as other complications associated with inappropriate complement activation.

This fall, the company has Phase II plans for its CETi-1 vaccine program. CETi-1 manages cholesterol by raising HDL, or good, cholesterol.

Ryan said Avant intends to take TP10 all the way through marketing for its indication in infants. The company received orphan drug status in that indication and will be eligible for an expedited review. Should all go well, the company could expect to be marketing the drug in 2003. If the company's rotavirus vaccine progresses as expected, Avant could find itself marketing TP10 for infants and receiving royalties from marketing partner SmithKline Beecham plc, of London, on the rotavirus vaccine in 2003.

"We expect TP10 in infants to be on the same track as [our rotavirus vaccine]," Ryan said. "Of course, our marketing partner and FDA will decide what happens."

The company plans to seek marketing partners for the adult indication of TP10 as well as the CETi-1 program.

"We don't plan to have a big marketing department. That's why we plan to find partners for the adult indication of TP10 and the CETi-1 program," Ryan said. "We'd like to design any pivotal trials in conjunction with partners who are more able to handle the marketing of the drug to such large markets."

Avant's stock (NASDAQ:AVAN) closed Monday at $8, down 50 cents.

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