By Mary Welch
Connetics Corp. raised $20 million through a private placement of 2 million shares of stock, with the proceeds being used to support Phase II trials for three new indications of Relaxin, a naturally occurring hormone that inhibits fibrosis.
The placement represents about 7 percent of the company. There are now 29.3 million shares outstanding. With this placement, the Palo Alto, Calif.-based company has about $70 million in cash.
"This was our target - $20 million," said John Higgins, the company's chief financial officer. "We had investors who were interested in the Connetics story and what we do. We are highly pleased to have them involved with the company."
Leading the placement was Boston-based Essex Investment Management Co. and BayStar Capital. BayStar is a new investor.
Higgins said the cash infusion should last through the filing of a biologics license application (BLA) for Relaxin's first indication, scleroderma, in mid-2001.
"We have products on the market now, which are producing revenue, and expect a BLA filing in the second or third quarter of 2001," he said. "We expect that our cash will see us through the BLA filing."
The company filed an investigational new drug application for a third indication in peripheral arterial disease. It also intends to start Phase II trials for infertility and kidney fibrosis. It already is in Phase I/II trials for infertility.
Earlier this month the company released Phase II results for Relaxin (recombinant human relaxin-H2) for patients with stable, moderate-to-severe diffuse scleroderma of less than five years' duration. The tests showed that Relaxin met its primary endpoint, which was improvement of skin scores, as measured by the Modified Rodnan Skin Score. The test measures the thickness of a patient's skin. (See BioWorld Today, June 7, 2000, p. 1.)
The company expects results from a pivotal Phase II/III trial by the end of the third quarter. This trial is similar to the Phase II trial but with more patients. The pivotal scleroderma trial involves 239 patients.
Formerly called ConXn, Relaxin was obtained in a licensing agreement from South San Francisco-based Genentech Inc. In addition to inhibiting fibrosis, Relaxin also promotes vasodilation and angiogenesis. Relaxin decreases the amount of collagen production by inducing the growth of collagenase, an enzyme that breaks down collagen. Because of those effects on collagen, it was developed as an antifibrotic agent, with scleroderma being a quintessential disease of excessive fibrosis.
Scleroderma is characterized by thickening of skin, caused by the swelling of fibrous tissue, with the threat of eventual spread to internal organs. Patients number between 5,000 and 10,000 in Japan and between 250,000 and 300,000 in the U.S. In Europe, there are between 200,000 and 250,000 patients. About 80 percent of patients are women of childbearing age.
Connetics' stock (NASDAQ:CNCT) closed Wednesday at $10.875, down $1.