By Mary Welch

Synsorb Biotech Inc. grossed C$21 million (US$14.44 million) by selling about 6 million shares in a bought-deal financing that will allow the Canadian company to continue the clinical development of its two advanced-stage products.

Synsorb sold 6 million shares of common stock at C$3.50 each to a syndicate of underwriters led by Yorkton Securities Inc., of Toronto. In addition, there is an overallotment option on another 900,000 shares. Prior to the financing, Synsorb, of Calgary, Alberta, had 31 million shares outstanding.

Other participating underwriters included Canaccord Capital Corp., of Vancouver, British Columbia; Dundee Securities Corp., of Toronto; and Loewen, Ondaatje, McCutcheon Ltd., of Toronto.

"We were oversold and we could have gone way, way up," said David Cox, Synsorb's president and CEO. "There are a variety of reasons for this success."

Cox said "the climate has changed dramatically the last few weeks for biotechnology financing. There has been a partial flight from technology to other areas such as small-cap biotechnology stocks. I haven't seen such interest in the last three years. The window is open."

Another reason is that the company has one carbohydrate-based product in Phase III trials and another about to enter Phase III, he said.

"We've been issuing some good news lately and investors are really interested in companies with advanced products that are close to market. There are few biotech companies with two products in Phase III in Canada, and not that many in the U.S.," Cox said.

Cox's third theory as to why this deal was so successful is a bit whimsical.

"The underwriter who did our deal had closed the previous day on a bought-deal for Hemosol that was grossly oversold," Cox said. "There were a lot of disappointed, anxious investors. They were looking for a biotech company and it was an easy sale."

Hemosol Inc., of Toronto, raised C$40 million (US$27.51 million) Tuesday. Hemosol is a Canadian biopharmaceutical company that will enter Phase III trials in Canada, the U.S. and the UK, for Hemolink, an oxygen carrier product.

Synsorb's Phase III product is Synsorb Pk, which is designed to prevent the progression to hemolytic uremic syndrome (HUS) in children who have contracted verotoxigenic Escherichia coli infection, and to treat enteric hemorrhagic E. coli infections. Currently, some 475 patients in Canada, the U.S. and Argentina have been treated.

"It's an odd disease," Cox said. "There are a number of variables involved so we can't predict in advance when the trial will be completed."

However, Synsorb intends to release interim Phase III data in March.

"Then we'll know whether to stop the trial and file for an NDA [new drug application], stop the trial and go back to work on something else, or keep on going," Cox said.

About to enter pivotal trials is Synsorb Cd (Clostridium difficile), which is designed to treat recurrent antibiotic-associated diarrhea, a common hospital-acquired infection. Earlier this week the FDA gave fast-track designation to the drug.

Interim results in a Phase II trial of Synsorb Cd were so statistically impressive that the company stopped the trial in order to proceed to Phase III. Enrollment in two Phase III trials should start in April, Cox said. (See BioWorld Today, Sept. 14, 1999, p. 1.)

The company may be expecting more financial infusions in the near future. "When we released the data on Synsorb Cd the phones were ringing off the hook," Cox said. "We are in advanced stage partnering talks for worldwide rights [except Canada and Japan] for both products."

Synsorb Cd and Synsorb Pk are licensed in Canada to Paladin Labs Inc., of Montreal. Synsorb Pk is licensed in Japan to Takeda Chemical Industries Ltd., of Osaka, Japan.

Synsorb's stock (NASDAQ:SYBB) closed Wednesday at US$2.50, down 18.75 cents.