By Mary Welch
Micrologix Biotech Inc. raised $10.1 million (C$15 million) in a "bought deal" financing that will allow it to fund the Phase II trial of its lead compound, MBI 226, as well as other developmental activities.
"We did the deal this way because there is a firm commitment on the part of the syndicate of underwriters," said Arthur Ayres, Micrologix's controller. "It is a firm number with essentially very few conditions in terms of regulatory issues. The syndicate has purchased the special units and they will now resell them to institutional clients." The deal will close next Thursday, he said.
The syndicate of underwriters, led by Yorkton Securities Inc., of Toronto, purchased 7.8 million special units at a price of $1.31 apiece. Each special unit entitles the holder to acquire one common share of Micrologix and a half share of a purchase warrant. Each whole share purchase warrant entitles the holder to buy one common share of Micrologix at $1.57 (C$2.35) for 12 months after the closing, or in certain circumstances, up to 24 months.
The stock (MBI) closed up 20 cents Thursday on the Toronto exchange at C$2.35.
Currently the company, based in Vancouver, British Columbia, has 23.2 million shares outstanding. After the financing, there will be 30.9 million shares out. However, if all the warrants and the agents' overallotment are exercised, that number would rise to 35.5 million.
In addition to Yorkton, participating in the placement are TD Securities Inc., RBC Dominion Securities Inc., CIBC World Markets Inc. and CT Securities Inc., all of Toronto.
"This is a significant and powerful group of participants," Ayres said. "We also believe that the institutional investors they are now arranging to purchase the special units will broaden our investment base and help us receive more support from analysts and the investment community."
The company, founded in 1993 with technology licensed from the University of British Columbia, has about $6 million cash on hand.
"This should last us a little over two years," Ayres said. "What it does is allows us to pursue our clinical development but also to operate in an optimal way and not worry about cash. It gives us greater flexibility, not only in running the company but in dealing with potential partners."
The company, which has about 50 employees, will start a Phase II trial of MBI 226 for the prevention of central venous catheter (CVC)-related bloodstream infections. Such infections claim the lives of 25,000 people annually and there are no approved drugs to prevent nor treat those infections, he said.
In the Phase I study, MBI 226 eliminated 99.9 percent of bacteria commonly found on the skin and prevented bacterial growth on catheters, the company said. In fact, the killing and suppression level was maintained for three days following one application of MBI 226. The company said this is important since dressings on intravenous catheters usually are not changed daily. The majority of CVC-related bloodstream infections are the result of either bacteria or fungi growing on the skin around the catheter insertion site and then down the catheter tract, where they come in contact with a patient's blood, the company said.
Micrologix plans on starting a Phase I trial with MBI 226 for severe inflammatory acne in the first quarter of next year and for an undisclosed indication in the second half of 2000, Ayres said.