By Debbie Strickland

Special To BioWorld Today

Maxim Pharmaceuticals Inc. more than doubled its cash reserves with a $20 million private placement financing earmarked primarily for the completion of three ongoing Phase III cancer trials.

The financing consisted of preferred stock convertible into shares of Maxim's common shares at a fixed price of $9.725 per share, for a total of 2.07 million shares. The conversion price is in line with Maxim's recent trading prices - the stock (AMEX:MMP) closed Monday at $9.688, down 18.75 cents.

Maxim, which currently has 10.2 million shares outstanding, may call for a mandatory conversion of the preferred stock into common stock after 90 days. Maxim, of San Diego, reported cash and equivalents of about $19.9 million on March 31.

"The preferred, convertible financing allowed us to do this in a quiet and quick manner," said Larry Stambaugh, Maxim's chairman and CEO, "and we have completed this financing with very high quality investors."

Those investors were undisclosed, but include both existing shareholders and new investors based in the U.S. and Europe.

The stock carries a dividend of 12 percent, a "very favorable interest rate compared to other transactions in the market," Stambaugh said. The dividend is payable in cash or additional preferred shares at the option of the holder.

Maxim's core 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 company is testing the drug in combination with anticancer and antiviral agents.

Maxim earlier this year completed enrollment in a 300-patient U.S. Phase III trial in Maxamine's lead indication, malignant melanoma. (See BioWorld Today, Feb. 8, 1999, p. 1.)

That trial, which is testing a combination of Maxamine and interleukin-2 against interleukin-2 alone, is expected to wrap in the second quarter of 2000, with a new drug application filing slated for mid-year, Stambaugh said.

Enrollment is continuing in an international Phase III trial of Maxamine in the same indication, but with a different treatment protocol, and in a Phase III trial in acute myelogenous leukemia.

The clinical program has advanced without a major U.S. or Europe pharmaceutical partner, though three companies - Chiron Corp., Amgen Inc. and BioNative AB - have agreed to collaborate on trials that use their respective products in combination therapy. Chiron, of Emeryville, Calif., markets interleukin-2; BioNative AB, of Ulmea, Sweden, markets the cytokine product interferon alfanative; and Amgen, of Thousand Oaks, Calif., produces interferon alfacon-1.

In May, Maxim landed its first two marketing partners for Maxamine: F.H. Faulding & Co. Ltd., of Underdale, Australia, which will market the product in Australia and New Zealand; and MegaPharm Ltd., of Hod Hasharon, Israel, which gained promotion rights in Israel. Terms were undisclosed, but Maxim expects to receive at least a 40 percent share of sales within those territories.

The company is seeking other partners for key regions, including Europe and the Pacific Rim, but plans to market or co-promote Maxamine in the U.S.