RegeneRx Biopharmaceuticals Inc. has secured $5 million in private financing in a deal to sell 5 million shares of the company's common stock to accredited investors at a price of $1 per share.

The $5 million offering is expected to close Feb. 29, the Bethesda, Md.-based company said.

RegeneRx has retained the option to repurchase stock. It also has agreed to issue warrants to purchase an additional 1 million shares of its common stock with an exercise price of $1.60 per share. There were no discounts or brokerage fees associated with the offering, the company said.

The proceeds will be used to provide working capital and to help fund ongoing clinical trials, RegeneRx said.

J.J. Finkelstein, president and CEO, said the company has not disclosed how long it expects the $5 million will last, but he added that that question could become clear in the company's 10-K filing, expected in March.

Founded in 1982, RegeneRx has raised $75 million since its inception, Finkelstein said. With about a dozen employees, the company is primarily an outsourced business and is focused on the discovery and development of novel molecules to accelerate tissue and organ repair. Currently, RegeneRx is developing three potential drug products, RGN-137, RGN-259 and RGN-352 for dermal, ophthalmic and cardiovascular wound healing, respectively. Those drug candidates are based on the peptide thymosin beta 4, a 43-amino acid peptide, in part, under an exclusive worldwide license from the National Institutes of Health.

RegeneRx currently is sponsoring three Phase II chronic dermal wound healing clinical trials, a Phase II ophthalmic wound healing trial and a Phase I parenteral trial in support of systemic administration of thymosin beta 4 for its cardiovascular clinical development program.

The next major readout of data will be from two Phase II dermal clinical trials, expected around midyear, or the end of June, Finkelstein said.

The company expects to continue going it alone through the end of Phase II to establish product efficacy, and has said the costs of Phase III trials will determine its partnership plans. Regardless, the company said it likely will enter marketing agreements with major pharmaceutical companies for all approved products.

Under the stock offering, RegeneRx retains the option to repurchase stock. The company may repurchase the shares at any time until Dec. 31, 2009, for $2 per share or, at any time between Jan. 1, 2010 and Dec. 31, 2010, for $2.50 per share. The company's repurchase right terminates after Dec. 31, 2010.

In addition, the investors have agreed to vote the shares, and any additional shares issued pursuant to the exercise of the warrants, with RegeneRx's board of directors until Dec. 31, 2010. The warrants have a term of three years.

A third of the warrants will vest upon the closing of the offering, a third is scheduled to vest Dec. 31, 2008, and another third is scheduled to vest Dec. 31, 2009. However, should the company repurchase all of the shares prior to Dec. 31, 2009, any unvested warrants would terminate as of the date of repurchase.

Shares of RegeneRx (AMEX:RGN) rose 2 cents Wednesday to close at $1.02.