By Mary Welch

Intent on funding a pivotal Phase IIb trial of Onco TCS, its anticancer compound, Inex Pharmaceuticals Corp. closed on the first $7.47 million ($C11 million) tranche of a $8.14 million equity offering.

The completion of the first part involved the issuance of 5.5 million special warrants, at a price of $2 each. Another 500,000 special warrants will follow in the second round. The special warrants are exchangeable into one common share of the company's stock.

"We currently have 11.1 million shares outstanding, and we're offering six million shares, so it is a sizeable issuance of shares," said Jeff Charpentier, director of finance for the Vancouver, British Columbia-based firm. "But the offering was oversubscribed, and because of the quality of the institutional investors as well as the demand, we took advantage of it and didn't cut it off. We believe many of these new institutional holders will become long-term investors."

Yorkton Securities Inc., of Toronto, Ontario, and Goepel McDermid Inc., of Vancouver, acted as agents.

The financing is expected to take the company through the early part of 2001.

"This is an unpartnered drug," Charpentier said, "so there is an opportunity for additional funding with a partner. Or we might go back to the equity market to get additional funding."

The money will support a proposed multi-center, open label study of Onco TCS for aggressive and transformed non-Hodgkin's lymphoma. The company is scheduled to meet with the FDA this month, and intends to file an investigational new drug (IND) application in August with enrollment starting by October. Inex will ask for a fast-track designation in its IND filing. The company could have the drug available within the next two years.

"We believe we can create a pivotal Phase IIb trial that will meet with FDA approval," Charpentier said. "There is no comparative therapy or no alternative therapy."

The proposed pivotal trial should involve five centers throughout North America, with enrollment of between 120 to 150 patients. "If we are at a similar accrual rate of our Phase IIa study, it should take us about a 12-month period to finish patient accrual," he said.

Onco TCS is now in a Phase IIa trial at the M.D. Anderson Cancer Center in Houston. Full results of the 70-person trial should be released in July.

In this trial, patients were enrolled after they had relapsed following standard first-line chemotherapies (including those with vincristine). They were then treated with Onco TCS alone. In some cases, patients were enrolled after failing to respond to as many as four other treatment regimens, including other experimental ones.

Both preclinical and clinical studies have shown that Onco TCS is well tolerated and highly effective at shrinking tumors in patients with advanced stage non-Hodgkin's lymphoma, the company said.

"Interim results indicate that Onco TCS has the potential to become an important component in the first line of treatment to certain kinds of non-Hodgkin's lymphoma," Charpentier said. The overall response rate reported in those results was 45 percent for the first 21 available patients. In each of the patients who responded to the treatment, the size of their tumors was reduced by at least 50 percent.

Onco TCS is an encapsulated, lipid-based formulation of the free form of vincristine that is administered with Inex's propriety drug delivery systems, called Transmembrane Carrier Systems (TCS). The systems allow intravenous administration and delivery of gene-based drugs into tumor and inflammatory disease cells at distal sites. Onco TCS can be administered safety at about twice the dosage typically given for free vincristine, the company said.

Vincristine is a cell-cycle, M-phase specific agent that arrests cell growth in mitosis, and often is part of several standard chemotherapy "cocktails" employed in the first-line treatment of several cancers, including leukemia, Hodgkin's lymphoma, non-Hodgkin's lymphoma and small-cell lung cancer.

Inex believes Onco TCS has the potential to completely displace free vincristine, which could result in a worldwide market for the new drug of at least $200 million.

Inex's stock (TSE:IEX) closed Friday at C$3.05, down C$0.19.