Special To BioWorld Today
Algos Pharmaceutical Corp. raised $25 million in a private placement earmarked for commercializing its lead product, MorphiDex, a pain-management drug.
The Neptune, N.J., company sold 1 million shares at $25 each to Biotech Target SA, a subsidiary of BB Biotech AG, of Schaffhausen, Switzerland. The price paid was the stock's average at the time the deal was being negotiated.
"We thought they were very well-informed investors, and we viewed this as a good investment for us," said Joe Sardella, Algos' executive vice president and chief administrative officer. "They had a very high interest in our business and thought we had great potential for future success. It was a very simple and straightforward transaction."
Algos now has about 17 million shares outstanding. Biotech Target also received a warrant for the purchase of up to 250,000 more shares at $25 each. Algos' stock (NASDAQ:ALGO) closed Tuesday at $27.75, up $1.25.
Algos' lead development area involves combinations of existing analgesics and anesthetics with N-methyl-D-asparate (NMDA) receptor antagonists, targeting various degrees of pain. A new drug application (NDA) was filed in August for MorphiDex, a capsule drug containing equal parts of morphine and dextromethorphan.
The company expects the FDA to respond within one year to the NDA, which contained data from 14 MorphiDex studies, involving more than 1,500 patients.
As of June 30, Algos reported its cash balance of $34 million would fund the company about two years. Proceeds from the new financing will be used to advance MorphiDex.
"The private placement provides us the financing to bring to fruition our commercialization efforts for MorphiDex," Sardella said. "It's a key building block to begin taking the necessary steps to launch that product."
Studies of MorphiDex have shown it delivers analgesic activity equal to morphine at about half the dose. Patients in a double-blind trial reported equal pain relief and global evaluations. Another Phase III study showed 250 chronic pain patients who converted over two weeks from their previous opiate rated MorphiDex significantly superior. The drug also acts quickly and lasts long, Sardella said.
Algos is in discussions with potential MorphiDex partners. The company wants its own U.S. sales force of about 150 representatives, focused on the oncology and pain markets. A co-promotion arrangement, a contract sales force and other options are being contemplated, Sardella said. Outside the U.S., Algos wants a licensing arrangement.
The company's second product, HydrocoDex, includes the narcotic hydrocodone and dextromethorphan, and targets less severe pain than MorphiDex. A Phase III trial began recently and an NDA filing is expected late next year, Sardella said.
In late Phase II trials is OxycoDex, for moderate pain. The company's fourth product is an unnamed neuropathic pain capsule, in early Phase II studies.
Another area of development at Algos is the subject of a collaboration with McNeil Consumer Products Co., a division of New Brunswick, N.J.-based Johnson & Johnson. This work includes the combination of the drugs Tylenol and Motrin with dextromethorphan.
Algos also is working on combining the anesthetic lidocaine with dextromethorphan to produce a product with increased anesthetic range and duration.
The Algos pipeline includes work on addiction treatments, the first being in the area of narcotics. Another development area is nicotine addiction. n