By Karen Pihl-Carey

Transkaryotic Therapies Inc. entered into a definitive agreement to issue 3.3 million shares of common stock for a private placement that will bring in $132 million.

Selected institutional and other accredited investors will buy the shares at $40 each, about a 10 percent discount of the share price at the time of the placement.

Pacific Growth Equities Inc., of San Francisco, served as the sole placement agent. Pacific Growth said it was the largest sole-managed equity deal in biotechnology.

"Anytime you raise $132 million, it's pretty significant for a company," said Eric Schmidt, an analyst with SG Cowen Securities Corp. in New York. "Clearly, it shows this company is dealing from strength and is able to raise quite a bit of capital in a somewhat wishy-washy biotech market.

"By our model, this would put them into profitability in 2001."

Daniel Geffken, TKT's vice president of finance and chief financial officer, said with the private placement the company has a little more than $200 million in cash. He agreed that the money would take TKT through to profitability.

Schmidt said the company raised the money with relative ease, showing "there's a substantial demand for TKT stock." The private placement gives the company about 22.5 million outstanding shares, up from 19.2 million at the end of the third quarter.

"I think the entire process took about four days," Geffken told BioWorld Today. "So we got it done quickly, we got the stock with terrific buyers, and it allows us to go back and do what we need to do and work on our clinical programs, get the INDs [investigational new drug applications] filed [for three preclinical products] and move forward with our pipeline."

The Cambridge, Mass.-based company plans to use the funds to build a sales and marketing force for its niche protein products, including alpha-galactosidase-A for Fabry disease, which should complete a Phase II trial by the end of the year. The money also will go toward preclinical and clinical programs, as well as working capital and other general corporate purposes.

"We have two late-stage and one early-stage programs in the clinic today. In the next six months, that will grow to six programs in the clinic," Geffken said. "The money will really be used to transition TKT from a research company to a research and development company. We're getting ready to launch our first products."

The Fabry disease market includes about 5,000 people worldwide and should demand a sales force of about 20 to 30 people, Schmidt said. Geffken said it is possible the Phase II trial data will support a regulatory filing, but he declined to say when TKT may actually file a new drug application.

TKT partnered in January with Sumitomo Pharmaceuticals Co. Ltd., of Point Richmond, Calif., to develop and commercialize the alpha-galactosidase-A enzyme replacement therapy for Fabry disease in Japan and other Asian countries. TKT owns all other rights to the product.

Also nearing the market is the company's gene-activated erythropoietin (GA-EPO) for anemia related to renal disease. TKT expects a Phase III trial to be completed by the end of the year.

The product, however, is the subject of a dispute with Amgen Inc., of Thousand Oaks, Calif., and cannot be marketed until the completion of an April 2000 trial. Amgen launched Epogen (Epoetin alfa) 10 years ago for the treatment of anemia associated with chronic renal failure for people on dialysis. It brought in $1.38 billion in sales in 1998, and $449 million in the third quarter of this year.

Amgen filed a lawsuit against TKT in 1997, seeking an injunction preventing TKT and its partner, Hoechst Marion Roussel Inc., of Frankfurt, Germany, from making, importing, using or selling EPO in the U.S. Amgen claimed TKT's EPO had the same structure and biological activity of its patented EPO. A judge stayed the case until TKT and Hoechst lost the protection of the clinical trial exemption. The two companies reopened the case in June. (See BioWorld Today, June 10, 1999, p. 1.)

Schmidt said he expects TKT to file an NDA for GA-EPO in early 2000 with a launch in early 2001.

With two products finishing clinical trials, TKT has three more products it plans to bring into the clinic in 2000. By the end of the year or early next year, the company expects to submit INDs for its second niche protein product for Hunter syndrome, as well as its second and third gene-activated protein products.

And patients participating in TKT's Phase I trial for Factor VIII gene therapy in hemophilia A will begin a two-year follow-up period by the end of the year at Beth Israel Deaconess Medical Center in Boston.

TKT posted a third-quarter net loss of $12.9 million, 67 cents per share, on license and research revenues of $649,000. At that time, the company had $80.9 million in cash and marketable securities.

TKT's stock (NASDAQ:TKTX) closed Friday at $46.50, up $1.187.