By Debbie Strickland

Despite the recent defection of a corporate collaborator, Atrix Laboratories Inc., of Fort Collins, Colo., has secured $50 million in a private placement — just weeks after informing the investment world that it was seeking to raise that amount.

A group of undisclosed U.S. and foreign investors agreed to purchase the 7 percent convertible subordinated notes, due 2004. Initial purchasers have a 30-day overallotment option for an additional $7.5 million worth of notes. The deal is scheduled to close Wednesday, Nov. 26.

The notes will be convertible into 2.63 million shares of common stock at a conversion price of $19 per share, or 3.03 million shares if the overallotment option is exercised. The notes will be non-callable for the first three years of the seven-year term.

The funding more than doubles Atrix's available cash. Besides citing "general corporate purposes," the company said it would use the funds "to acquire complementary products, technologies and businesses."

As of Sept. 30, the company had $31.3 million in cash, cash equivalents and marketable securities, following a net loss of $1.5 million over the first nine months of 1997.

Licensing Agreement Aborted

Earlier this month Gensia Sicor Inc., of San Diego, terminated a worldwide licensing agreement for a version of leuprolide acetate incorporating Atrix's Atrigel drug delivery mechanism. The decision came six months after successful completion of feasibility studies for the product as a treatment for prostate cancer.

Gensia Sicor said that although the project was going well, plans changed due to factors related to the acquisition of Sicor SpA, of Milan, Italy. Atrix meanwhile plans to initiate clinical trials of the leuprolide-Atrigel product in the second half of 1998.

The company last year guided its initial product — an Atrigel barrier product for use in treating periodontal disease — to FDA approval and market launch. A second product currently is under review at the FDA. Both are part of a $50 million-plus-royalties deal with Block Drug Co., of Jersey City, N.J.

Atrix's platform technology is Atrigel, a patented biodegradable polymeric barrier and drug delivery product. Administered as a liquid, Atrigel forms a solid implant when it comes into contact with the moist environment inside the body. The solid implant is designed to biodegrade over an extended period of time. When coupled with a drug, Atrigel releases the drug as it biodegrades, allowing a single injection to provide treatment for weeks or months.

A year ago, the company signed up Block as a partner for three of its Atrigel-based periodontal disease therapies: Atrisorb Barrier for Guided Tissue Regeneration (Atrisorb GTR Barrier); Atrisorb GTR Barrier With Doxycycline; and Atridox.

Under that agreement, Block agreed to pay in excess of $50 million, including milestones tied to Atridox and Atrisorb GTR Barrier With Doxycycline. Atrix will manufacture the products and will receive royalties on sales. (See BioWorld Today, Dec. 19, 1996, p. 1.)

In March 1996, Atrisorb GTR Barrier became the first Atrigel product to win FDA approval. Classified as a device, the product is used during root-exposing gum surgeries to selectively promote the growth of cells that will re-anchor teeth to the jawbone.

The company reported $1.1 million in product sales for the first nine months of 1997, the bulk of which came from Atrisorb GTR Barrier. Atrix received $10 million in total revenue over those nine months — a 292 percent increase over the comparable 1996 period. The revenue tally includes a $7 million milestone payment from Block.

A doxycycline-spiked version under development adds an antibiotic to provide localized infection control, in addition to tissue isolation.

The third product covered in the Block agreement is Atridox, an Atrigel formulation of the antibiotic doxycycline for use in treating periodontitis. The product is placed into an infected area around teeth and releases the antibiotic over seven days to kill the bacteria associated with periodontal disease.

In a Phase III trial, Atridox demonstrated clinical equivalence to scaling and root planing, which is the conventional method of removing bacterial plaques.

At the earlier end of Atrix's pipeline are Atrisorb GTR Barrier with Growth Factors, to aid regeneration of periodontal tissues; solid-tumor therapies combining Atrigel with such chemotherapeutics as doxorubicin and vinblastine; the Atrisol aerosol system for the prevention of postsurgical adhesions; and a formulation of Atrigel and bupivacaine for the management of postoperative pain.

Atrix's shares (NASDAQ:ATRX) closed Monday at $14.50, down $0.562. *