By Mary Welch
Creative BioMolecules Inc. raised $25 million in a private placement and will use those funds to develop proteins for applications in tissue and organ regeneration, as well as further research on new applications for its recombinant protein, OP-1.
"Our OP-1 bone graft device has completed clinical trials and is moving toward the FDA. Our second partner, Biogen, is pursuing development of our renal program," said Karla MacDonald, communications specialist. "So, as our first products are moving either toward clinical trials or commercialization, we're starting to look at our proprietary rights to other growth-factor proteins, expand our research, and get a more robust (drug) pipeline."
The preferred stock, which carries no dividend, is convertible into the company's common stock at $10 per share through May 1999, and at higher conversion prices thereafter. In addition, the company may redeem the preferred stock under certain conditions. Currently there are 33.4 million shares outstanding.
Diaz & Altschul Capital LLC, of New York, was the placement agent and Delta Opportunity Fund Ltd., also of New York, was the lead investor. A registration statement will be filed for the shares of common stock to be acquired on future conversion of the preferred stock.
Creative BioMolecules, which posted first quarter 1998 revenues of $3.4 million (down slightly from first quarter 1997 revenues of $3.6 million) has cash on hand of about $26 million. With the new financing, that number will approach $50 million and will be enough to last for at least two years, MacDonald said.
The company reported a net loss of $4.9 million for first quarter 1998, which ended March 31, as opposed to $3.7 million for the same period last year.
Two Major Collaborations Under Way
Creative BioMolecules researches and develops products for the regeneration and restoration of human tissues and organs. Its products are based on a series of naturally occurring proteins that act as a trigger to help uncommitted embryonic cells become a specific cell, organ or tissue. In adults, the proteins have been shown to prompt the growth of bone, cartilage, kidney, tooth and brain tissues.
OP-1, which the company isolated and cloned in 1987, is a morphogenic protein belonging to the transforming growth factor-beta (TGF-b) superfamily. OP-1 stands for osteogenic protein.
The company currently has two major collaborations. The first, with Stryker Corp., of Kalamazoo, Mich., a surgical and medical products firm, goes back to 1985. In 1996, Stryker paid Creative BioMolecules $12 million to expand the orthopedic program with OP-1. The two companies extended the research component of the agreement through the summer but are currently negotiating its future direction. (See BioWorld Today, May 10, 1996.)
"We are the exclusive manufacturer of OP-1 for Stryker and did the early research for them. They conducted the clinical trials and started the filing process for the pre-market approval (PMA) with the FDA. But we both have research staffs, so we're negotiating to see what form the research program will take — who will do what. I don't suspect it will be ended, though," MacDonald said.
The PMA filing process for the OP-1 bone graft device was started this spring, with the final module expected to be submitted mid-year. If approved, the product should be on the market in the second half of 1999. The device, a combination of OP-1 and a resorbable collagen scaffold, is a paste-like material that is surgically implanted in bone fractures that have not healed. The protein activates a highly specialized bone cell reaction that starts normal bone regeneration.
Currently, fixing a hard-to-mend bone involves using bone chips removed from a patient's hip and surgically applying them to the break. Studies showed the OP-1 technique and the bone grafting methods had similar clinical successes but the OP-1 way does not require a second operation to obtain bone from the hip.
Biogen Deal Targets Renal Failure
Creative BioMolecules' second partner is Biogen Inc., of Cambridge, Mass., agreed to pay up to $122.5 million for the rights to develop and market a potential tissue regeneration drug for acute and chronic renal failure using OP-1. For renal failure, OP-1, which is produced in the kidneys, seems to slow the degeneration of the kidneys by halting cell death. (See BioWorld Today, Dec. 11, 1996.)
In preclinical trials, OP-1 played a vital role in getting rid of accumulated toxins in the blood stream and enhanced kidney recovery.
Biogen currently is deciding whether to concentrate on acute or chronic renal failure and should make a decision by fall, MacDonald said, with Phase I trials starting next year.
Acute renal failure is characterized by the rapid and sudden loss of the kidney's ability to filter blood. The condition affects some 250,000 people a year in the U.S. It is often associated with multiple organ failure and has a high mortality rate.
Chronic renal failure is a gradual and progressive loss of kidney function often associated with diabetes and high blood pressure. Chronic renal failure afflicts about 700,000 people in this country, who, at the end-stage of the disease, require dialysis or a kidney transplant.
Creative BioMolecules also is looking into OP-1 effectiveness in treating neurological disorders and osteoporosis. In preclinical studies at the Massachusetts General Hospital and Harvard Medical School, both in Boston, it was reported that a single dose of OP-1 enhanced motor function following stroke in animals. The data suggested OP-1 promotes the development of additional neural pathways, allowing the brain to compensate by rerouting the flow of information around the stroke-damaged areas. The standard treatments mostly aim, instead, at protecting the neurons from damage and cell death after a stroke.
The company's stock (NASDAQ:CMBI) closed Friday at $5.968, up $0.093. *