Oxigene Inc. raised its cash position to nearly $41 million through a $16 million registered direct common stock offering, giving new CEO Dai Chaplin the fuel to accelerate development of the company's pipeline of anti-vascular drugs, including its lead candidate, Zybrestat (fosbretabulin tromethamine) for patients with relapsed ovarian cancer.

The company is selling shares to institutional investors for $2.96 each, including a half warrant to purchase additional shares at $2.90 each, and expects the offering to close by May 28. H.C. Wainwright & Co. LLC acted as the exclusive placement agent for the offering, and will receive warrants equal to 4 percent of the aggregate number of shares of common stock sold in the offering, at an exercise price of $3.63 per share.

Chaplin, who just completed his first week as CEO, replaced Peter Langecker, who led the company through a restructuring after its unsuccessful merger with South San Francisco-based Vaxgen Inc. (See BioWorld Today, Feb. 8, 2013.)

Chaplin was Oxigene's chief scientific officer and head of R&D. He was also a key contributor to work that formed the scientific basis for not only the development of Zybrestat, but also subsequent vascular targeting development programs at Astrazeneca plc and Aventis Pharma (now part of Sanofi SA).

Oxigene raised net proceeds of about $20.4 million from a public offering in February. That led then-CEO Langecker to report in a first quarter earnings announcement May 6 that the company's bank of $24.7 million would support its operations well into 2015.

Now, with an additional $16 million, the South San Francisco-based company plans to build on momentum gained from positive Zybrestat top-line data it reported in March, Chaplin told BioWorld Today.

The data showed for the first time that Zybrestat increased progression-free survival when combined with Avastin (bevacizumab, Roche AG), as compared with Avastin alone. The phase II trial was sponsored by the National Cancer Institute's Gynecologic Oncology Group, meaning that the non-profit has control of when it is released. Chaplin said he expects the full data to be released before the year's end.

Meanwhile, Oxigene is preparing to run two additional trials. The first, a combined phase Ib/II, will pit Zybrestat in combination with Votrient (pazopanib, Glaxosmithkline plc) against ovarian cancer. It's sponsored by the Christie National Health Service Foundation Trust and the Hillingdon Hospital NHS Trust of the UK and will begin in the second half of this year. The second, a phase II sponsored by Oxigene, will test Zybrestat as a single agent therapy for gastrointestinal neuroendocrine tumors. Chaplin expects the new funding will help accelerate both, possibly through the expansion of trial sites, though it's too early to say, he said.

The company is also advancing OXi4503, a dual-mechanism VDA as a potential treatment for acute myeloid leukemia, through a phase I trial. Like its structural analog, Zybrestat, the company has found that OXi4503 blocks and destroys tumor vasculature, resulting in extensive tumor cell death and necrosis. It may also affect the cell shape of hematopoietic stem cells. But in addition, it forms a reactive orthoquinone metabolite that has been shown in preclinical studies to have anti-tumor activity.

Oxigene's vascular disrupting agents (VDA) choke tumors by cutting off their blood flow. They kill tumor cells by selectively blocking the blood vessels that carry oxygen and nutrients to tumors, preferentially binding to tubulin, an important structural protein within the cells that line the interior of tumor blood vessels, disrupting the cellular scaffolding. The normally flat cells become round, blocking blood flow to the tumor and causing tumor cell death.

Despite the cash infusion, wary investors sent Oxigene shares (NASDAQ:OXGN) down as much as 11 percent in early trading, with shares closing Friday down 9 percent, at $2.71 per share.

As Chaplin wrapped up his first week as CEO, he seemed unfazed by the hit. "My focus is creating long-term value," he said. "There's a lot of potential in this company, not only with Zybrestat. We're not just a one drug company. We just need to raise the profile there."