Celgene Corp. raised $15 million in a private financing that will help it continue development of thalidomide and other products, and that might be the last financing needed before the company turns profitable.
The Warren, N.J., company placed the convertible notes with John Hancock Mutual Life Insurance Co. and affiliates. The notes can be converted into common stock at $18 per share beginning in January 2000.
If all are converted it would add about 833,000 shares to the 16.6 million Celgene has outstanding. New York-based Warburg, Dillon, Read LLC acted as agent in the financing.
Celgene's stock (NASDAQ:CELG) gained 12.5 cents per share Thursday to close at $17. The company had about $12.3 million in cash on Sept. 30, with a net loss of nearly $17 million for the first three quarters.
The company's thalidomide, trade-named Thalomid, was approved in July for treating erythema nodosum leprosum, a debilitating condition associated with leprosy. The product was launched in late September and had sales of about $1 million in the third quarter.
John Jackson, Celgene's chairman and CEO, told BioWorld Today that analysts' estimates of $30 million to $35 million in Thalomid sales this year seem "reasonable" as long as articles supporting the drug's efficacy in other indications are published in peer-reviewed journals, as anticipated. Analysts are projecting Celgene will turn profitable by the end of the year.
Thalidomide, used as a tranquilizer in Europe and Canada in the late 1950s and early 1960s, was banned for its teratogenic properties after being implicated in thousands of birth deformities. But it is coming back strong now because of its ability to inhibit tumor necrosis factor-alpha, a protein whose overproduction is linked to inflammatory and immunological diseases. Its anti-angiogenic properties are showing much promise in treating cancer.
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In December, Celgene got additional thalidomide rights when it sublicensed related patents and technology from EntreMed Inc., of Rockville, Md. Orphan status for several indications came with that deal. Part of the agreement called for royalty payments to EntreMed for all indications.
Jackson expects publications this year showing Thalomid's benefit in brain cancer, multiple myeloma, AIDS-related wasting, other cancers and Crohn's disease.
Preliminary results in multiple myeloma already have been presented at a scientific conference. They showed about 30 percent of the refractory patients had no further disease progression, and 35 percent had a favorable response. An abstract showed that moving thalidomide into the treatment regimen earlier, with chemotherapy drugs, was even more effective.
"We're in the process of talking to the FDA about what would be required for an NDA [new drug application] in this indication," Jackson said.
A trial of about 100 brain cancer patients taking thalidomide and a platinum-based chemotherapy drug showed a 60 percent response rate (tumors stopped growing) in primary tumors, with glioblastoma undetectable by CAT scans in 10 percent of patients, according to the investigator. A separate trial testing thalidomide alone is producing a 40 percent response rate.
"We're certainly accumulating evidence, which should be published this year, showing thalidomide should be effective in treating primary brain cancer and multiple myeloma," Jackson said, adding that data also have supported its effectiveness in helping AIDS and cancer patients put on weight, in other cancers, and in Crohn's disease.
Another program at Celgene involves a chirally pure version of Ritalin. That product is in Phase III trials for attention deficit hyperactive disorder. Another program is SelCID. The lead compound in that area, CDC801 - a TNF-alpha and phosphodiesterase IV inhibitor - recently was taken into Phase II for Crohn's disease.
And Celgene's wholly owned Celgro Division signed two deals last year, and is negotiating two more, Jackson said, to apply chiral chemistry technology in the agrochemical area.
"The $15 million placed with John Hancock is recognition of the significant progress the company has made over the past three years, transforming into a pharmaceutical company with a lead product on the market and a deep product pipeline," Jackson said. "It should give us the resources we need to turn cash-positive, according to analysts." n