Somatix Therapy Corp. announced Thursday that it has raised$11.7 million through the private placement of 2 million newlyissued shares of common stock (NASDAQ:SOMA) priced at $5.85per share.
The shares were sold to a group of institutional and individualinvestors at a 10 percent discount to the $6.50 closing price ofthe stock on the day the offering was priced. RobertsonStephens & Co. and Oppenheimer & Co. arranged thetransaction.
As with all PIPE (private investment in public equity)financings, the closing is contingent on the effectiveness of theS3 registration statement that Somatix of Alameda, Calif., willfile with the Securities and Exchange Commission.
This cash infusion adds considerably to Somatix's financialstrength. Following receipt of the net proceeds, Somatix said itwill have a total of $24 million in cash and cash equivalents.The company ended its first quarter on Sept. 30 with about$14.6 million in cash, cash equivalents and marketablesecurities. But because Somatix has been burning cash atroughly $3.5 million to $4 million per quarter, the companywas looking at only a year of life.
Now, it's got enough to see it through the next 18-24 months,Mark Bagnall, vice president and chief financial officer, toldBioWorld. He included in his estimate an undisclosed sum thatwill be forthcoming from Baxter Healthcare Corp., Somatix'snew corporate partner in gene therapy for hemophilia (seeBioWorld, Nov. 4).
To add to the day's glad tidings, Somatix also announced that ithas received the green light from FDA to start clinical trials onits gene therapy for advanced kidney cancer. The company hasdeveloped a tumor vaccine called GVAX that uses a patient'sown tumor cells, genetically modified to contain the humangene for granulocyte macrophage-colony stimulating factor(GM-CSF), irradiated and then reinjected, to stimulate an anti-tumor immune response.
The protocol was approved by the Recombinant DNA AdvisoryCommittee (RAC) of the National Institutes of Health in March,and a Phase I trial will be conducted at The Johns HopkinsOncology Center. "This is one of the few gene therapy trials thatis company sponsored and company controlled," Bagnall said.It's also unique because it is double-blinded and there arecontrol subjects (some patients' tumor cells will not begenetically modified, though they will be treated in all otheraspects similarly to the GM-CSF-containing ones) to monitorwhether the procedure per se causes toxicities or other adversereactions.
Somatix's stock closed Thursday at $7 a share, down 25 cents.
-- Jennifer Van Brunt Senior Editor
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