By Lisa Seachrist
WASHINGTON — As part of a self-marketing plan for its lead diarrhea drug, Shaman Pharmaceuticals Inc. raised $14 million in a royalty-based public offering.
The South San Francisco company sold 140,000 shares of Series C convertible preferred stock at $100 per share. The company will attempt to raise an additional $6 million by Sept. 13 by selling 60,000 more shares of the stock at the same price.
Those shares are the product of a financing mechanism Shaman devised to allow the company to market its AIDS-related diarrhea drug, Provir, in the United States without entering into an alliance with a larger corporate entity.
The convertible preferred stock sold in the financing entitles holders to the greater of a $10-per-year dividend, payable semi-annually in common stock, or a pro rata share of a royalty on the company's net U.S. sales of Provir.
Last month, Shaman filed to raise an expected $16 million by way of the royalty-based stock. (See BioWorld Today, July 16, 1998, p. 1.)
The percentage of the royalty to be divvied up by investors will depend upon the total money raised by the company during this offering: a 7 percent royalty for the current $14 million total investment, and a 10 percent royalty on a total investment of $20 million. That portion of the royalty due investors in excess of the initial 10 percent dividend, which is paid in common stock, will be paid in cash where permitted by law.
An oral compound, Provir is derived from an extract of the croton plant, found in Latin America. Rather than attacking infectious microbes or inhibiting gastrointestinal activity, the drug targets the underlying cellular mechanism for diarrhea by blocking chloride secretion.
The company is currently completing a Phase III study of Provir in patients with AIDS-related diarrhea. Last month, the trial was more than 75 percent enrolled and proceeding ahead of schedule. Shaman is expected to file a new drug application with the FDA in the first quarter of next year. (See BioWorld Today, July 31, 1998, p. 1.)
In two different Phase II dose-optimization studies, Shaman showed that Provir also effectively combatted acute watery diarrhea. The company intends to launch a Phase III study soon for this larger indication.
Shaman has two other products in development: nikkomycin Z, an oral antifungal for the treatment of systemic fungal infections; and SP-134101, an oral product for the treatment of Type II diabetes.
In the diabetes research program, Shaman's collaborator is Lipha SA, a wholly owned subsidiary of Merck KGaA, of Darmstadt, Germany.
The preferred stock in the new offering will trade under the symbol SHMNP on the NASDAQ OTC Bulletin Board. Shaman's stock (NASDAQ:SHMN) closed Wednesday at $2.625, down $0.187. *