By Mary Welch

NPS Pharmaceuticals Inc. raised $46.8 million in a private placement of 3.9 million shares with institutional investors, with the proceeds going to fund the upcoming trials of ALX 1-11 and ALX 0600.

"The key for us was that it has not only been a favorable market for biotechnology in general, but for us after the merger," said David Clark, vice president of corporate communications at NPS. "Our stock price has since strengthened. The market is now looking at the depth of our pipeline and the promise of our advanced products. Because of this, we were able to get the price we needed without excessive dilution, which is a nice combination."

NPS, which merged with Toronto-based Allelix Biopharmaceuticals Inc. in September, sold the shares for $12 each, which netted NPS $43.5 million. The institutional investors received a discount, as the company's stock (NASDAQ: NPSP) closed Monday at $16.375, up 25 cents.

The company had about 19.5 million shares outstanding prior to the placement and now has about 23.6 million shares outstanding.

"It's about 20 percent of the company," Clark said. "It was really a nicely targeted offer. It's exactly what we needed and our timing was perfect. We don't have a projected life span for how long these funds will last us. However, we are comfortable that with this money, along with our corporate partnerships and future marketing partners, we will be able to take the company to profitability in the foreseeable future."

NPS, of Salt Lake City, has about $75 million in cash following the placement.

The money will fund the Phase III trials of ALX 1-11, a human parathyroid hormone for post-menopausal osteoporosis that was developed by Allelix. Phase III trials are expected to start in the second quarter and should last about 18 months, Clark said.

"ALX 1-11 has proved to show significant bone mineral density," Clark said. "It builds bones."

In Phase II trials conducted at 18 centers in the U.S. and Canada, patients who gave themselves subcutaneous injections of ALX 1-11 saw an increase in bone mass density of the lumbar spine of 2.6 percent, 4.6 percent and 7 percent at the low, middle and high doses, respectively. All results were significantly different from the placebo, and there seemed to be a positive effect of the treatment in the hip after 12 months as well. (See BioWorld Today, Oct. 26, 1998, p. 1.)

ALX 1-11 was partnered with Astra AB, of Sodertalje, Sweden, but the alliance was dropped following Astra's corporate restructuring. Astra paid Allelix an $11.3 million milestone for finishing the Phase II trials. (See BioWorld Today, Sept. 28, 1998, p. 1.)

"ALX 1-11 is currently unpartnered and we will be looking for a marketing partner eventually," Clark said.

ALX 0600 is an analogue of a growth factor found in the digestive system that is being developed for gastrointestinal diseases. A small Phase II trial is scheduled to start dosing soon in patients with short bowel syndrome, with a larger trial planned for later in the year.

"It's a protein growth factor that acts in the gut," Clark said. "We're testing it as an enhancement in nutritional uptake in patients with compromised bowels, such as those who have an inflammation of the gut as a result of chemotherapy or radiation treatments."