By Frances Bishopp
Viragen Inc., a specialist in the development of natural human interferons, has closed $20 million in new financing under Regulation D, selling 20,000 shares of newly issued Series C and D convertible preferred stock to two institutional investors at $1,000 per share.
Regulation D allows investors to place funds privately with a public company and subsequently allows the company to register the stock at a later time. Terms of the preferred stock call for the issuance of the company's common stock upon conversion at a price per share to be determined at the time of conversion.
Dennis Healey, chief financial officer at Viragen, told BioWorld Today that 5,000 of the shares were Series C convertible preferred stock and 15,000 of the shares were Series D convertible preferred stock.
The early stage biotech development company, Healey said, has earmarked the funds for clinical trials of Omniferon, Viragen's second generation natural human alpha interferon product. The first clinical trials for this product, Healey said, will be held in Europe this year. Trials also are scheduled for the U.S., but specific dates have not been set.
Founded in 1980, Viragen is headquartered in Hialeah, Fla., and has four direct subsidiaries: wholly owned Vira-Tech Inc., Viragen Technology Inc., Viragen USA Inc. and majority-owned Viragen Europe Ltd.
Until May 1993, Viragen had not actively operated for several years due to insufficient funding. Moreover, the company has operated at a loss since inception and had an accumulated deficit of $21.6 million by June 30, 1996.
Viragen's primary product is natural leukocyte alpha interferon, made from human white blood cells, for the treatment of viral diseases and immune disorders, including HIV/AIDS, hepatitis B and C, and multiple sclerosis (MS).
The company has developed a new proprietary production technology which produces very pure natural human interferon that the company expects to be price- competitive with synthetic interferon products and lower in price than other naturally derived interferon products.
Natural interferon is a glycoprotein substance that stimulates and modulates the immune system, impedes the growth and propagation of various viruses and inhibits malignant cell growth.
Alpha Leukoferon and Omniferon are trade names for Viragen's natural alpha interferon product in injectable form. Viragen has completed a series of research trials under Florida's investigational drug program which shows promising preliminary results for the use of the product in the treatment of MS and HIV/AIDS.
Currently, the company is conducting an investigational study of its Alpha Leukoferon product for treatment of HIV/AIDS in hemophilic patients.
In June 1996, Viragen raised $15 million as part of a $50 million financing commitment from three institutional investors: GFL Performance Ltd., GFL Advantage Fund Ltd. and Proton Global Asset Management LDC. This financing was done through 5 percent Series B convertible preferred stock.
On June 12, 1996, the company reported that the American Red Cross-Biomedical Services Division signed a letter of intent with Viragen to form a strategic, long-term alliance focusing on joint research into the development of blood-derived products and processes, including Omniferon for U.S. and overseas distribution.
A new production plant is near completion in Edinburgh, Scotland, for the production of Omniferon. The facility is a result of a collaborative licensing and manufacturing agreement made in July 1995 with the Common Services Agency of Scotland, an adjunct of the Scottish government which acts on behalf of the National Health Service in Scotland and the Scottish National Blood Transfusion Service (SNBTS).
Under this agreement, SNBTS will manufacture Omniferon non-exclusively worldwide in return for royalties and preferential access to Omniferon for Scottish patients at substantially reduced prices.
Viragen, with this transaction, has approximately $37 million in cash. The company has put $15 million in escrow pending completion of procedures for amending the company's charter, scheduled for the end of February.
The company projects a total of six fully operational production sites (one in Scotland, five in U.S.) by 2001. *