By Karen Pihl-Carey
SangStat Medical Corp. secured a $30 million line of credit through an agreement with Phoenix-based Finova Capital Corp.
The company, based in Fremont, Calif., will be able to draw down the funds over a three-year period. The credit bears interest at an average rate of prime plus .75 percent on the outstanding balance.
"We were able to negotiate a large line of credit with a major lender," said Steve Dance, the company's senior vice president of finance. "I think it gives us a source of cash to fund our growing business, and it will help us achieve our goals over the next two or three years."
The company's goals, Dance told BioWorld Today, are to develop a product pipeline, funding the development of future products, such as RDP58, and to fund Phase III trials that expand the use of the already-marketed Thymoglobulin in hematological areas. The credit line also will provide the company with additional working capital.
"We can draw down whenever we wish to, essentially, so it's an open line of credit in that regard," Dance said. "Based on our projections, we would be able to borrow the full $30 million within 12 months."
Certain assets of SangStat, including certain intellectual properties, secure the credit.
In preclinical trials, RDP58 (rationally designed peptide 58) showed benefits in 12 monkeys with an inflammatory bowel disease. RDP58 is a tumor necrosis factor (TNF-alpha) inhibitor, which the company expects to move into human trials primarily for Crohn's disease, but also ulcerative colitis, either in this quarter or in the third quarter.
SangStat has an intravenous and an orally active version of RDP58, both of which showed benefit in the monkeys. The drug candidate either cured the monkeys of the condition or was proved effective by stopping diarrhea.
The company also recently submitted a new drug application in Canada for Thymoglobulin for prophylaxis and treatment of acute renal graft rejection in adult renal transplant recipients. The drug now is available under a special access program, permitting its distribution upon the request of a physician. Thymoglobulin is a pasteurized antithymocyte rabbit immunoglobulin that was approved in the U.S. in January 1999. The drug captured the top sales position in the U.S. immunosuppressive antibody market for December, the company said. It also is in clinical trials for hematological disorders and other areas of transplantation.
The company's SangCya oral solution (cyclosporine) was approved in Germany earlier this month. And a British court rejected an attempt by Novartis Pharma AG, of Basel, Switzerland, to have the UK marketing authorization of SangStat's SangCya oral solution revoked.
SangCya is the leading immunosuppressive drug used to prevent graft rejection in solid organ transplant recipients, the company said. The solution is co-promoted and distributed with Abbott Laboratories, of Abbott Park, Ill. It was launched in November 1998.
For 1999, SangStat posted net revenues of $58.1 million, with a net loss of $33 million, or $1.95 per share. The company had $24.1 million in cash as of Dec. 31. It has about 17.3 million shares outstanding.
The company also raised $15 million in February by selling 450,000 shares to an institutional investor. (See BioWorld Today, Feb. 17, 2000, p. 2.)
SangStat's stock (NASDAQ:SANG) closed Monday at $24, down $1.50.