By Lisa Seachrist

Hollis-Eden Pharmaceuticals Inc. raised $13 million in a private placement of 719,220 shares of common stock.

Capital Research and Management Company, of San Francisco, led a small group of investors in purchasing the stock, which was priced at approximately $18.08 per share, a slight discount over prevailing stock prices. Hollis-Eden will use the funds for general corporate purposes, which include moving its lead drug candidate, HE2000, into U.S. clinical trials.

"This offering gives us about $40 million in cash on hand and we feel comfortable that is about two years of operating expenses," said Terren Peizer, president of the San Diego-based company. "We were offered more than the $13 million, but we decided that the $40 million cash on hand was an adequate amount."

In addition, the Series A preferred stock issued last May has been converted into common stock, reducing the number of outstanding warrants for Hollis-Eden's stock, Peizer said. "This turns a great deal of potential equity into secure equity," he said.

Hollis-Eden specializes in discovering drugs to treat infectious disease and immune system disorders. The company's technology platforms include cell energy regulators, immune system regulators, and synthesis regulators.

Cell energy regulators interrupt a virus's ability to use the energy supplies in human cells. The company's lead drug candidate, HE2000, uses this technology platform to stymie HIV's ability to replicate in an infected cell by choking off the cellular energy-producing enzymes and proteins the virus needs.

Because the drug works on the host cells rather than the rapidly mutating virus, Hollis-Eden believes it may be an HIV therapy that is less prone to drug resistance.

The firm's research affiliate, Edenland Inc., of Ireland, is conducting two Phase I/II clinical trials of HE2000 as a monotherapy in approximately 40 patients who have never received treatments for their HIV infection. Hollis-Eden hopes to start Phase I/II trials in the U.S. in "the very near future."

In addition to HE2000, the company has several drug candidates in preclinical testing. HE317 and IDPS are immune system regulators. The company is testing HE317, an up-regulator, as a means to boost the immune system in HIV-infected patients. IDPS, a down-regulator, is being examined as a means of preventing transplant rejection.

PP29 and PP48 are modified nucleosides that stop DNA/RNA synthesis. These molecules are being targeted against such infectious agents as cytomegalovirus, toxoplasmosis and leishmania.

Hollis-Eden's stock (NASDAQ:HEPH) closed Tuesday at $25 a share, up $0.25. n