EntreMed Inc., a Rockville biopharmaceutical company, said yesterday that it raised $14 million from institutional investors to fund clinical trials of its anti-cancer drug, Panzem, planned for early next year.
The biotechnology company, which is working to develop cancer-treatment therapies, sold about 5.5 million shares of common stock at $2.55 per share in a private placement. The company also issued five-year warrants at a 15 percent premium to the market price of the common shares.
Shares of EntreMed closed yesterday at $3.03 per share, down 22 cents on the Nasdaq stock market. The company had 37.2 million shares outstanding as of Nov. 9.
Investors included OrbiMed Advisors, which invests in pharmaceutical and biotechnology companies around the world; Domain Associates, a venture capital firm with a focus on life sciences; Perceptive Life Sciences, and Quogue Capital LLC.
"We're happy to have the resources on our balance sheet," said Dane Saglio, chief financial officer. "It will remove any question of how we can afford some of the activities we've been discussing."
Saglio said the stock sale will extend the company's cash for planned operations well into 2006.
The company said the proceeds will be used for clinical trials of a liquid form of Panzem in the first quarter to help determine proper dosages. The drug in a solid capsule form is in clinical trials for cancer treatments and is being developed for other applications
"If the trials go very well, we would look at initiating more trials in '05," Saglio said.
The money raised by the stock sale will give the company a longer window for testing and provide resources if EntreMed decides to expand the trials, he said.
The additional cash will also allow EntreMed to consider acquisitions of other technologies or products, Saglio said.
The company said it will file a registration with the Securities and Exchange Commission within 30 days to allow the investors to resell the common stock.
EntreMed has shifted its business strategy over the past few years to small-molecule drugs, such as Panzem, that are cheaper to make and less complicated to administer than the large-molecule protein drugs, which generally are injected, that it had focused on initially.
The shift in strategy, including reducing research-and-development expenses to focus on the Panzem trials, has helped EntreMed improve its financial performance, company officials have said.
Last month the company reported a third-quarter net loss of $3.1 million, or 9 cents per share, an improvement compared with a net loss of $4.6 million, or 15 cents per share, posted in the third quarter of 2003. The company lost $19 million for all of 2003, down from a loss of $39 million for 2002.