By Randall Osborne

Having failed twice in attempts to raise money and having lost its NASDAQ listing, Hybridon Inc. bounced back with a financing arrangement, expected to be disclosed today, that adds almost $76 million to its balance sheet and could mean a rebirth for the troubled antisense company.

Andy Grinstead, CEO of the Cambridge, Mass.-based company, declined to comment on the funding. Because another closing may occur in the next two months or so — raising another $10 million, potentially — company officials are bound by the Securities and Exchange Commission's "quiet period" rules.

Hybridon closed a private placement of about 6.6 million shares of common stock at $2 per share and warrants to buy common stock, along with 114,300 shares of Series A convertible preferred stock, sold at $70 per share, and warrants to purchase common stock.

Gross proceeds from that transaction totaled about $21 million, including about $6.7 million applied to reduce existing payables and satisfy lease and other obligations.

Also, about $48.6 million of the principal amount of Hybridon's 9 percent notes have been tendered to be exchanged for shares of Series A convertible preferred stock and warrants to buy stock — leaving only about $1.4 million worth of the notes outstanding. In effect, the $48.6 million debt was exchanged for equity in the company.

In addition, all of the recent buyers of Hybridon units consisting of 14 percent notes, due 2007, and common stock warrants have agreed to trade them for stock priced at $2 per share and warrants, which brings the total proceeds of the offering to $27.3 million.

The $27.3 million added to the $48.6 million brings Hybridon's bottom-line benefit to $75.9 million.

Viewed in other terms, adding the $6.7 million of creditor participation to the $48.6 million from the 9 percent notes, the transactions remove more than $55 million of the company's debt.

Either way, the deals — which include reinvestments from Europe and the Middle East, as well as money from the U.S. — put Hybridon in a stronger position after months of uncertainty.

The company began restructuring in July 1997, after the Phase II failure of its lead product, GEM 91 for advanced HIV infection. In the fall of that year, partner F. Hoffman-La Roche, of Basel, Switzerland, pulled out of their antisense collaboration for hepatitis C and human papillomavirus. (See BioWorld Today, July 28, 1997, p. 1 and Sept. 5, 1997, p. 1.)

Over time, Hybridon's staff was cut from 228 to about 70. Its property was subleased. Its burn rate dropped from a high of more than $5 million per month in May 1997 to less than $1.5 million monthly.

The company lost its NASDAQ listing in December 1997 because it had too few tangible assets, and came up with a complicated overseas financing arrangement early this year, which ultimately was set aside in favor of the current, simpler one. (See BioWorld Today, Jan. 26, 1998, p. 1.)

Antisense technology involves using synthetic segments of DNA and RNA to stop the production of disease-associated proteins by interacting at the genetic level with target strands of messenger DNA. Hybridon is the only company with all second-generation clinical and preclinical antisense compounds, all amenable to oral administration.

Even as it floundered, Hybridon managed to put two compounds into the clinic: GEM 92 for HIV and AIDS, and GEM 231 for colon cancer. The company has launched a custom manufacturing division, Hybridon Specialty Products, and is developing in the clinic two formulations for an "advanced chemistry antisense oligonucleotide" called GEM 132, for systemic cytomegalovirus (CMV) infection, and CMV-induced retinitis in AIDS patients. *