By Mary Welch
Ribi ImmunoChem Research Inc. completed an $8.24 million private placement to an undisclosed institutional investor to help the Hamilton, Mont., company gear up for the manufacturing and launch of its first product, Melacine, a therapeutic vaccine for melanoma.
Although the company doesn't expect to file its biologics license application (BLA) with the FDA until the end of the year, it intends to use the money to expand manufacturing capabilities, perhaps even building a new facility.
"The funds will be used for general operating expenses and for a manufacturing facility expansion," said Ron Kullick, Ribi's vice president and legal counsel. "Our present manufacturing site is 17,500 square feet, and we haven't determined the size of an anticipated expansion. Nor have we decided whether we will add on or build a new building. We have plenty of room to grow here. Melacine and its adjuvants certainly play a part in that equation."
Melacine consists of lysed cells from two human melanoma cell lines with a broad array of melanoma antigens, combined with Ribi's Detox adjuvant. Detox adjuvant contains MPL (monophosphoryl lipid A) and mycobacterial cell wall skeleton, both of which stimulate the human immune system.
In an early review of data, an ongoing Phase III trial of Melacine combined with Intron A (interferon alpha-2b) has demonstrated encouraging results in terms of the primary endpoint, which is overall survival. (See BioWorld Today, March 26, 1998, p. 1.)
A 1997 Phase III trial of Melacine evaluated against chemotherapy showed the vaccine improved quality of life but did not demonstrate a survival benefit. (See BioWorld Today, May 21, 1997, p. 1.)
In March, Ribi ImmunoChem sold worldwide marketing rights, except in Canada, to Schering-Plough Corp., of Madison, N.J., in a deal valued at up to $30 million in signing fees and milestone payments. Schering-Plough acquired the Canadian rights in June. (See BioWorld Today, March 17, 1998, p. 1.)
The investor, whose identify won't be revealed until the company files a registration statement with the Securities and Exchange Commission, purchased 8,240 shares of convertible preferred stock bearing a 5 percent interest rate, which is payable yearly in preferred stock.
The preferred stock may not be converted for 90 days, with the conversion price fixed at $6.04. After 120 days, the conversion price varies.
Upon conversion, the investor will own about 8 to 9 percent of the company, still well behind investors Amerindo Investment Advisors Inc., of New York, which owns 1.8 million shares, and SmithKline Beecham, plc., of London., which owns slightly less than Amerindo, or 1.25 million shares.
SmithKline also has the rights to purchase 500,000 additional shares at a defined price and up to $2 million worth of stock at market price, Kullick said.
"We were looking for appropriate financing and some folks called to our attention this investor. We felt it was the best and most efficient way to go. We met the investor and handled the placement ourselves," he said.
The Melacine licensing process is "well under way in both Europe and Canada," Kullick said. The company will ask the FDA to grant it expedited status, which could put the vaccine on the market next year.
In Canada, the Health Protection Branch — the equivalent of the FDA — conducted an in-depth Good Manufacturing Practices audit of the company's facility the week of July 13.
Ribi ImmunoChem's stock (NASDAQ:RIBI) closed Thursday at $4.531, down $0.09. *