Staff Writer

NPS Pharmaceuticals Inc. expects to net $93 million in an underwritten public offering of 11 million shares at $9 a share, about a 2.6 percent discount over the previous day's closing price. It is the Bedminster, N.J.-company's fourth major financing in the past 20 months, for a total of more than $230 million during that period.

That tally could increase if underwriters exercise their option to buy 1.65 million additional shares, a potential gross of about $14.85 million, which, according to the company, would bring the total net proceeds to approximately $107 million if the overallotment option is fully exercised.

The company declined comment until the offering closes on specifics of how proceeds would be used. However the company said in an SEC filing that it expects proceeds to fund clinical trials and seek FDA approval of product candidates, as well as providing working capital. NPS has two ongoing Phase III programs, Gattex (teduglutide) in short bowel syndrome (SBS) and NPSP558 (parathyroid hormone 1-84 [rDNA origin] injection) in hypoparathyroidism.

NPS upsized the offering from the 9 million shares announced earlier in the week. The company ended 2010 with about $134 million cash and projected 2011 cash burn to be in the range of $85 million to $100 million.

Citi and Leerink Swann LLC are joint book-running managers for the offering, which is expected to close by April 19. Canaccord Genuity Inc. and Needham & Co. LLC are senior co-managers, and Brean Murray, Carret & Co., Summer Street Research Partners and ThinkEquity LLC are co-managers for the offering.

Shares of NPS (NASDAQ:NPSP) were down 14 cents, to close at $9.10 Thursday.

NPS in January reported positive Phase III data for Gattex and expects to submit a new drug application to the FDA in the second half of this year.

The Phase III study, known as STEPS, was designed as a confirmatory trial to support a 2007 Phase III study that yielded mixed results in SBS – Gattex showed statistical significance at the low dose, but not at the high-dose regimen – and was designed to evaluate the drug's ability to reduce patients' dependence on parenteral nutrition (PN). (See BioWorld Today, Oct. 12, 2007.)

The confirmatory study solidly hit its primary endpoint, defined as the percentage of patients who achieved a 20 percent or greater reduction in weekly PN, with 63 percent (27 of 43) of patients in the Gattex group showing a response vs. 30 percent (13 of 43) in the placebo arm (p = 0.002).

Moreover, those treated with Gattex for 24 weeks also showed significantly greater reductions in weekly PN volume from baseline compared to placebo – an average drop of 4.4 liters vs. 2.3 liters (p = 0.001). Gattex was well tolerated, with only of one of the four patients dropping out of the study from the Gattex arm. More than 97 percent of patients in the trial opted to continue in an open-label extension trial designated STEPS 2. (See BioWorld Today, Feb. 1, 2011.)

In late March NPS qualified for a mid-seven-digit milestone payment from Nycomed GmbH, of Zurich, Switzerland, when that firm applied for European marketing authorization for teduglutide as a once-daily subcutaneous treatment for short bowel syndrome. Nycomed licensed the rights to develop and commercialize the drug outside of North America, exercising its option in 2007 for a $185 million deal for Gattex and picking up half of the external costs for the STEPS trial. (See BioWorld Today, Nov. 1, 2007.)

In its second Phase III program, NPS in early March reported it had randomized the last patient in its Phase III trial of NPS558, a bioengineered form of human parathyroid hormone, for hypoparathyroidism. The study, designated REPLACE, includes a total of 135 patients. Top line results are expected in fourth quarter.

This week's offering is the latest in a series of financings that, not including today's offering, have raised a combined $137.7 million and fueled the late-stage development programs.

In September 2010, a public offering of 7.91 million shares of common stock, including about 1 million shares sold pursuant to the full exercise of an overallotment option, at $6 a share, netted total proceeds of about $44.4 million. A year ago, in April 2010, NPS raised a total of about $53.3 million in the combined public and overallotment sale of 10.35 million shares of common stock at $5.50 per share. In August 2009 the company entered into a $40 million line of credit arrangement with Azimuth Opportunity Ltd. (See BioWorld Today, Sept. 17, April 19, 2010, and Aug. 7, 2009.)

In other financing news:

• ICo Therapeutics Inc., of Vancouver, British Columbia, entered an equity line facility with Dutchess Opportunity Cayman Fund Ltd. through which Dutchess committed to provide as much as $10 million of equity capital during the next three years. The company said it expects to use the financing to advance clinical programs including the iCo-007 Phase II trial in diabetic macular edema.

• Synta Pharmaceuticals Corp., of Lexington, Mass., received a $2 million equipment loan from Oxford Finance Corp., a subsidiary of Sumitomo Corp., to pay for laboratory equipment used to manufacture compounds for use in Synta's ongoing clinical trials in oncology and chronic inflammatory diseases.