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12:00 AM
 | 
Sep 21, 2009
 |  BioCentury  |  Finance

Ebb & Flow

The banking community didn't waste any time recuperating from summer vacations, as evidenced by a surge of IPO and follow-on activity last week. The theme of the first two follow-ons of the fall seemed pretty clear: give investors late-stage data to mull over and get about $100 million.

Thus, Vivus Inc. (NASDAQ:VVUS) raised $94.5 million on Thursday through the sale of 9 million shares at $10.50. The overnight deal saw very little price erosion - Vivus proposed the offering after market close on Wednesday, when its share price was $10.79.

The prior week, the company's Qnexa phentermine/topiramate met the primary endpoints in two Phase III trials to treat obesity. The data sent the stock up $4.67 (73%) to $11.06 that week. Vivus plans to submit an NDA to FDA by year end(see BioCentury, Sept. 14).

Underwriters were JPMorgan; JMP Securities; Lazard; and Merriman Curhan Ford.

Rigel Pharmaceuticals Inc. (NASDAQ:RIGL) also did an overnight follow-on, and the small molecule developer bumped up the number of shares to more than double the proposed amount. On Thursday, Rigel raised $94.3 million through the sale of 13 million shares at $7.25. It had proposed to sell 6 million shares late Wednesday, when its share price was $7.66.

In July, Rigel had two inflection points for lead compound fostamatinib (R788). It met the primary endpoint in a Phase IIb trial in rheumatoid athritis patients who failed to respond to methotrexate alone and continued to receive methotrexate throughout the trial. About two weeks later, fostamatinib missed the primary and secondary endpoints in a Phase IIb trial to treat RA patients who failed to respond to at least one biologic (see BioCentury, July 13 & July 27).

Prior to both announcements, Rigel was trading at $11.24.

Fostamatinib is a solid formulation of R406, a Syk kinase inhibitor. The company plans to start Phase III testing next year.

On the week, Rigel shares lost $0.06 to $7.71, while Vivus shed $0.02 to $11.04.

Rags to riches

VCs didn't exactly plump up the first development stage biotech to file for an IPO since early 2008. Inflammation company Anthera Pharmaceuticals Inc., which last week filed to raise up to $70 million, reported a scant $1.3 million in cash at June 30.

In July and September, some existing VCs did pony up another $10 million in convertible promissory notes with 8% annual interest. The notes automatically convert into shares at a 25% discount at the next financing. Warrants for 25% of the principal were also attached and are exercisable at the price of shares at the next financing.

In its S-1, Anthera said it is in discussions with existing investors to garner another $20 million, but didn't disclose whether this also would be structured as debt.

From its inception in September 2004 through June 30, Anthera had spent $60.1 million. In 1H09, it had a net loss of $7.1 million.

Anthera plans to start a Phase III trial of its varespladib (A-002) to treat acute coronary syndrome (ACS) by year end, assuming ongoing discussions with FDA over an SPA reach a timely conclusion. The company hopes to complete enrollment of the trial in 2H11. It has rights to develop and commercialize the secretory phospholipase A2 (sPLA2) inhibitor worldwide, except in Japan, from Eli Lilly and Co. (NYSE:LLY) and Shionogi & Co. Ltd.

Anthera plans to market its own products that target the acute care setting in the hospital or highly specialized physician segments. To reach general practitioners or cardiologists, as well as for international markets, it plans to seek a partner.

Investors include VantagePoint Venture Partners (33% pre-IPO stake); Sofinnova Ventures (21.2%); Caxton Advantage Life Sciences Fund (6.1%); HBM BioCapital...

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