Telios Pharmaceuticals Inc. offered on Friday to buy back allsecurities it sold in connection with a public offering that closedSept. 29 and netted the San Diego company $13.4 million.Friday's decision came one day after the company's release of trialresults of Argidene Gel for diabetic foot ulcers that showed nearlyequal healing in the patient and control groups. Telios requestedtrading be halted Thursday on its stock, in anticipation of Friday'sannouncement.The stock (NASDAQ:TLIO) took a beating Friday, losing $1.19 (60percent) to close at 81 cents per share in trading of more than 1.7million shares. Before the buyback offer, Telios said it had about$22 million in cash and 25 million shares outstanding.David Duncan Jr., Telios' chief financial officer, told BioWorld thetender offer had nothing to do with any possible legal ramificationsrelated to negative trial results so soon after completion of theoffering."It came down to an issue of business integrity," Duncan said. "We,and biotech companies in general, need to support the publicmarkets to be successful. We felt no obligation to do this, but wefelt to maintain the support of our investors we needed to."The offering consisted of 3 million shares of 1994 convertiblepreferred stock and 3 million step-up warrants, sold as a unit for$4.75 apiece. Telios' common shares were trading at about $2.25 atthe time.Each share of preferred stock was convertible into two shares ofcommon stock at the option of the shareholder, or it wouldautomatically convert on Sept. 22, 1996. The warrants entitled theholder to buy two shares of common stock for $5.50 in the firstyear, and $6.50 in the second year.Telios is offering $4.75 for each share of preferred stock togetherwith a warrant. Or, if sold separately, $4.50 for the stock and 25cents for each warrant. Duncan said the company would repurchaseshares even if they had been traded since the offering.The company, in a news release Friday, said, "The board ofdirectors of Telios decided to authorize the repurchase of thosesecurities in light of the juxtaposition of the public offering and therecently announced unexpected results of Telios' second clinicaltrial investigating Argidene Gel in the treatment of diabetic footulcers."The release went on to say that while the risks were spelled out inthe offering's prospectus, the board thought it advisable torepurchase the securities at the original offering price.Duncan said results of the diabetic foot ulcer trial were released assoon as the company got them. Forty-one percent of patients in thetreatment group and 40 percent of controls achieved completehealing at 20 weeks, which was the primary endpoint in the blinded,randomized, controlled 150-patient trial.Telios officials were at a loss to explain the high healing rate amongplacebos, given that they expected 20 to 25 percent healing in thegroup. A previous, 10-week trial in the same indication showedcomplete healing in 35 percent of patients, but only 8 percent ofcontrols.Duncan said Telios first will complete its analysis of the diabeticfoot ulcer trial, which will include looking at secondary endpointsof rate and time of healing. Then it will unblind a 150-patient trialin venous stasis ulcers, which also was completed in September.The data from those two trials will be reviewed together with resultsfrom a trial that showed statistical significance in acceleratedwound healing for partial thickness burns in children.Once all the data are analyzed, the company will be in betterposition to decide where to go from there. He said it was also tooearly to talk about the company's financial situation."There are a lot of decisions we have to make in the next fewweeks," Duncan said.Telios has another product, TP-9201, an anti-clotting agent, inPhase I trial, and other products in various stages of development. n
-- Jim Shrine
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