By Karen Pihl-Carey
Xenova Group plc expects to raise US$15.2 million by August through the issuance of 2.9 million units, comprised of shares and warrants.
Upon full exercise of the warrants next year, the Slough, UK-based company would raise another $14.8 million, for a total of about $30 million.
"We're obviously delighted that this has been accomplished and that it demonstrates clearly a level of support for the company," said David Oxlade, CEO of Xenova.
Each unit, priced at 345 pence (US$5.18), is comprised of five new ordinary shares and four warrants. The warrants are exercisable at 85 pence (US$1.28) each between Jan. 1, 2001, and Oct. 31, 2001. Nomura International plc, of London, is acting as underwriter for the offering, and the units have been conditionally placed with institutional investors.
The offering allows Xenova to advance its cancer research projects targeting MRP-related multidrug resistance, next-generation topoisomerase inhibitors, telomerase and plasminogen activator inhibitor-1 (PAI-1). The company expects to bring XR11576 into the clinic early next year, making it the company's third drug in clinical trials. Xenova has a drug development agreement with Indianapolis-based Eli Lilly & Co. focused on small-molecule inhibitors of PAI-1.
"In terms of taking those programs forward, this funding ensures that that can happen," Oxlade said.
The financing also ensures that the company will complete six Phase II studies, three with XR9576 and three with XR5000, and possibly move the two product candidates into Phase III trials.
"It gives us some two to three years cash reserves," Oxlade told BioWorld Today. "Our cash burn is currently running at an annualized rate of about [US$12 million] a year."
Remaining proceeds will go toward working capital requirements, including relocation costs that will come up when the current lease on Xenova's facility expires.
XR9576 is a P-glycoprotein pump inhibitor being developed to restore the sensitivity of multidrug-resistant cancer cells to specific cytotoxic drugs. XR5000 acts as an inhibitor of both topoisomerases I and II, enzymes that are involved in the replication of DNA during cell division and play a key role in the proliferation of cancer cells.
XR5000 is being tested in ovarian cancer, non-small-cell lung cancer and glioblastoma. Xenova stopped a Phase II colorectal cancer study with XR5000 when it failed to produce a complete or partial response to treatment. (See BioWorld Today, June 2, 2000, p. 1.)
Following the offering, Xenova will have about 69 million shares outstanding.
The company's stock (NASDAQ:XNVA) closed Thursday at $1.281, up 6.25 cents.