By Mary Welch

For the second time in five months, Maxim Pharmaceuticals Inc. went to the financial well for $20 million to fund its three Phase III cancer trials.

This time it raised $20.6 million by selling convertible preferred stock to a group of existing shareholders as well as new investors based in the U.S. and Europe. The preferred stock is convertible into shares of the San Diego-based company's common stock at a fixed price of $8.925 per share.

The preferred stock may be converted into a total of about 2.3 million shares of common stock. The price was determined by the average closing bid price of the company's stock for five days prior to the completion of the private placement.

The company now has about 10.2 shares of common stock outstanding. The preferred stock has a dividend of 12 percent payable in cash or in additional shares of preferred stock.

"We were very pleased by the quality of the new investors as well as from the response of those who already had a position in the company and wanted to maintain their stake," said Larry Stambaugh, the company's chairman, president and CEO. "This placement gives us a much stronger balance sheet and cash position. It is also very similar to the one we did this summer."

In late July, Maxim closed on a $20 million private placement by selling preferred stock convertible into shares of common stock at a fixed price of $9.725, for a total of 2.07 million shares. At the time, the conversion price was in line with the company's recent trading history. The company said the money would help fund the Phase III trials as well as more than double its cash reserves. (See BioWorld Today, July 27, 1999, p. 1.)

The new round will help the company complete its three ongoing trials as well as underwrite the expenses necessary for regulatory applications and product launch.

Maxim's lead product is Maxamine, a histamine type-2 receptor agonist, which shuts off production of free radicals, thereby protecting T cells and natural killer cells. The drug is being tested in combination with anticancer and antiviral agents.

Maxim recently completed enrollment of 300 patients in a Phase III trial in malignant melanoma. The company expects to unblind and release the first data in the first quarter of 2000 with a new drug application filing on target for mid-2000, Stambaugh said.

"It's a life-threatening disease, so we expect a priority review," he said. "We could be launching our first product in 2001."

The other studies are an international Phase III trial for the same indication but with a different treatment protocol, and acute myelogenous leukemia, where enrollment has just finished.

Trials of Maxamine also are under way for the treatment of hepatitis C and advanced renal cell carcinoma.

If approved, the product will be marketed in Australia and New Zealand by F.H. Faulding & Co. Ltd., of Underdale, Australia, and in Israel by MegaPharm Ltd., of Hod Hasharon, Israel.

"We are having a large number of discussions with potential partners for Maxamine in Europe and as a co-promoter in the United States," Stambaugh said.

Maxim's stock (AMEX:MMP) closed Tuesday at $9.75, down 12.5 cents.