By Catherine Hollingsworth
Staff Writer
Achillion Pharmaceuticals Inc. plans to raise about $50 million through the sale of stock and warrants to a select group of investors, money that would be used to advance the company's early stage pipeline of drug candidates for hepatitis C virus (HCV).
At the end of June, the New Haven, Conn.-based company had $20 million in cash resources. With the added funds from the financing, which is expected to close Aug. 20, Achillion hopes to extend its cash through most of 2012.
The financing is intended to take the company's ACH-1625 protease inhibitor to the completion of Phase IIa testing, explained Mary Kay Fenton, Achillion's vice president and chief financial officer.
The Phase II study, which is expected to get under way next month, will have a 28-day segment that is targeted to report data in March 2011 and a 12-week segment that is slated to report results at the end of next year.
"We believe this financing will get us through both of those milestones," Fenton told BioWorld Today.
In addition, Achillion hopes to move its preclinical candidates, ACH-2684, a pan-genotypic protease inhibitor, and ACH 2928, an NS5A inhibitor, through Phase I testing in 2011. The company also plans to put those candidates in combination studies in 2012 with other HCV assets in development, Fenton said.
ACH-1625, while it has shown promising data in Phase Ib studies, is far behind the front runners in the crowded HCV space. Both Vertex Pharmaceuticals Inc. and Merck & Co. Inc. have their own HCV candidates in Phase III, protease inhibitors telaprevir and boceprevir, respectively. Analysts view both drugs as approvable.
The current standard therapy for HCV is a combination of ribavirin and a pegylated interferon. There are no protease inhibitors currently approved for the infection.
Achillion believes its protease inhibitor, though still in early testing, may stand apart from the others because of its safety and tolerability and sustained viral suppression.
"Based on the early Phase Ib data, we view ACH-1625 as a very promising HCV protease inhibitor in early development," Cowen & Co. analyst Phil Nadeau stated in a research note. He added, "We believe the risk/reward of owning ACHN shares at current levels is highly favorable."
In several dosing cohorts, study patients infected with HCV were dosed for five days and showed a mean maximum drop in viral load of between 3.63 and 4.25 logs. All dosing cohorts also showed a sustained viral suppression in HCV-infected subjects, even after dosing was completed.
"This observation could be an important distinguishing feature and competitive advantage for our compound in comparison to other HCV therapies," Elizabeth Olek, vice president and chief medical officer, said in a Thursday conference call.
A select group of investors, namely venture firms Domain Associates, Clarus ventures, Quaker BioVentures and Pappas Ventures, have agreed to purchase Achillion's stock and warrants in the private placement offering.
While the company's focus is HCV, it also has an HIV candidate elvucitabine, an L-cytosine nucleoside analogue reverse transcriptase inhibitor. Earlier this year, Achillion reported 96-week data showing that the drug had a substantial antiviral effect similar to 3TC (lamivudine, GlaxoSmithKline plc), with 95 percent of patients in the elvucitabine-treated group achieving undetectable viral load compared with 93 percent in the 3TC group.
Achillion is offering 19,755, 101 shares of common stock at a price of $2.49 per share, its consolidated closing bid price reported by NASDAQ Aug. 17.
The warrants to purchase 0.35 shares of common stock for each share of common stock are priced at $0. 125 per warrant share. The warrants, which have a seven-year term from the date of issuance, represent the right to acquire an aggregate of 6,921,285 shares of common stock and will be exercisable at a price of $3. 1125 per share.
Shares in Achillion (NASDAQ:ACHN) lost 1 cent, closing at $2.60 Thursday.
In other financing news:
• Complete Genomics Inc., of Mountain View, Calif., which recently filed to take the company public, raised $39 million in its Series E financing. New investor Sands Capital led the round and was joined by existing investors Essex Woodlands, OVP Venture Partners, Prospect Venture Partners, OrbiMed Advisors, Highland Capital Management and Enterprise Partners. Complete Genomics also reported that it is evaluating a lawsuit alleging patent infringement filed against it by Illumina Inc., of San Diego, and Solexa Inc. (acquired by Illumina), in the U.S. District Court in Delaware. The lawsuit claims that the Complete Genomics Analysis Platform infringes three patents owned by the plaintiffs. The company said it believes it has "substantial and meritorious defenses to the claims."
• Corcept Therapeutics Inc., of Menlo Park, Calif., has filed a shelf registration statement to sell, from time to time, up to $100 million in equity, debt and other offerings. Specific terms will be disclosed at the time of any financing. Proceeds will be used for research, development and commercial activities, working capital and other general purposes. The company is developing drugs to treat severe metabolic and psychiatric disorders that are associated with steroid hormone cortisol. Lead product Corlux is a Phase III drug candidate for Cushing's syndrome and psychotic depression.
• Jennerex Inc., of San Francisco, completed a fully subscribed private placement financing with aggregate gross proceeds of about $8.6 million. The money will allow the company to complete the ongoing Phase II trials of JX-594 in patients with liver cancer and colorectal cancer. Existing stockholders as well as a number of new investors participated in the financing.
• MannKind Corp., of Valencia, Calif., said that it has entered a previously announced stock lending agreement in which it will lend 9 million shares of its common stock to Bank of America NA. It also entered an underwriting agreement with Bank of America affiliate Merrill Lynch, Pierce, Fenner & Smith Inc., in which Merrill Lynch will sell the shares at an offering price of $5.55 per share. MannKind will not receive any proceeds from the common stock offering but will receive a nominal one-time lending fee. And Bank of America will be required to return the borrowed shares under the terms of the share lending agreement. Bank of America will use the short position resulting from the loan and sale of the shares of MannKind's common stock to facilitate the establishment of hedge positions by investors in a concurrent private offering of $100 million aggregate principal amount of MannKind's senior convertible notes due 2015. The notes, which will mature on Aug. 15, carry an approximate conversion price of $6.80 per share. An additional $10 million aggregate principal amount of the notes could be purchased to cover any overallotments. The closing of the common stock offering is expected to take place Aug. 24.
• Silence Therapeutics Plc, of London, a company focused on RNAi therapeutics, said that it anticipates future milestones of more than $65 million stemming from a siRNA deal that partner Quark Pharmaceuticals Inc., of Fremont Calif., recently entered with Novartis AG, of Basel Switzerland. Privately held Quark would receive a potential $680 million, including $10 million up front, under the deal, which grants the Swiss drugmaker an option to obtain an exclusive worldwide license to develop and commercialize QPI-1002. The investigational p53 temporary inhibitor which incorporates Silence Therapeutics' AtuRNAi technology. (See BioWorld Today, Aug. 19, 2010.)
Published August 20, 2010
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