By Mary Welch

Despite a tough financial market, Valentis Inc. raised $19.2 million in a private placement, with the proceeds going to fund its five current clinical trials.

The Burlingame, Calif.-based company sold 1.915 million shares of common stock.

"They were not sold at a premium when we started this thing," said Bennet Weintraub, the company's chief financial officer and vice president of finance. "They are at a premium now. The market conditions made it tough, but we had people who believed in the company, its technology and products. They realize that we're not a short-term investment."

There are now about 29 million shares outstanding, so this current round took about 7 percent of the company.

Among the investors were the State of Wisconsin Investment Board; BayStar Capital; Merlin BioMed Asset Management, of New York; Framlington Asset Management, Park Place Capital and the Finsburgy Trust, all of London; Compania Financiera Internacional, of Geneva; BSI-AG, of Lugano, Switzerland; and Banca Intermobiliare di Investimenti, of Torino, Italy.

"We have always had a number of Swiss, Italian and English investors, and we went back to the investors who had supported us in the past," Weintraub said. "Not all the investors were already shareholders, but many were. We are really fortunate to have attracted the investors we did."

Part of the company's success with this offering stemmed from it having five products in the clinic, including two in Phase IIb trials, and three more scheduled to start in the near future.

"We have a broad portfolio, not just one product," he said. "We have multiple chances of success rather than just betting everything on one product."

Valentis, which was the result of the merging of Megabios Corp., of Burlingame; GeneMedicine Inc., of The Woodlands, Texas; and PolyMASC Pharmaceuticals plc, of London, expects to finish its first Phase IIb trial by the end of the year. That trial is for its non-viral vascular endothelial growth factor (VEGF-165) gene medicine. In interim Phase II data, it was shown that there was evidence of blood vessel formation when the VEGF 165 gene medicine was delivered via its cationic lipid gene delivery system. (See BioWorld Today, Nov. 11, 1999, p. 1.)

Its Phase IIb trial with interleukin-2 gene therapy for the treatment of squamous cell carcinoma of the head and neck should be completed in early 2001, Weintraub said.

Among its other trials currently under way are a Phase IIa trial with interferon-alpha for the treatment of malignant angioendothelioma and a Phase I/II with interleukin-12 gene therapy for the treatment of squamous cell carcinoma of the head and neck.

Valentis' stock (NASDAQ:VLTS) closed Monday at $7.375, down 6.25 cents.