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With the first oncology candidates generated from its fragment-based drug discovery program set to enter the clinic next year, SGX Pharmaceuticals Inc. is strengthening its cash position by $25 million.

The San Diego-based firm entered a securities purchase agreement in connection with a private placement to investors, including OrbiMed Advisors LLC and Great Point Partners LLC, in which it will sell units - comprised of one share of common stock and a warrant to purchase 0.3 shares - priced at $5.06 each. All told, SGX expects to sell 4.9 million shares of common stock and issue seven-year warrants for 1.5 million addition shares at a $5.77 exercise price per share.

SGX President and CEO Mike Grey said a PIPE was "the best way to go," allowing the firm to quickly raise a "relatively modest sum" that will "be sufficient to take us to the next milestone."

Over the next year, the company plans to move into the clinic with at least two small-molecule programs stemming from its FAST (Fragments of Active Structures) platform.

"We really see 2008 as a transformative year for us," Grey told BioWorld Today.

The company, founded in 1998 as Structural GenomiX Inc. to provide high-throughput screening services, later shifted its focus to drug discovery and development, with the aim of building its own pipeline of cancer therapeutics. In 2004, the firm in-licensed a late-stage acute myelogenous leukemia drug, Troxatyl, from Laval, Quebec-based Shire BioChem Inc., hoping to add a near-term opportunity. But that drug fizzled in a Phase II/III study, and SGX, instead, turned all its attention back to its FAST platform.

By the end of next year, SGX "could be in the position of having four INDs (investigational new drug applications) filed" and be well into clinical trials, Grey said.

Net proceeds from the financing are expected to total about $23.2 million, and will support those upcoming studies, starting with Phase I testing of SGX-523, a MET tyrosine kinase inhibitor in development for solid tumors. The company plans to submit an investigational new drug application by the end of this year and be in the clinic in early 2008, Grey said.

As "one of the most exciting cancer targets out there," Grey said, MET has been "implicated in a wide range of tumors." It also has been linked to resistance to certain treatments, namely endothelial growth factor receptor (EGFR) inhibitors such as Tarceva (erlotinib, OSI Pharmaceuticals Inc. and Genentech Inc.) and Iressa (gefitinib, AstraZeneca plc), so inhibiting MET "could resensitize cells to EGFR-inhibitor therapies," he added.

Behind SGX-523, the company is prepping a lead candidate from its bcr-abl program. It plans to file an IND for SGX-393 in Gleevec-resistant chronic myelogenous leukemia in the first half of 2008. SGX also has a second bcr-abl program, partnered with Basel, Switzerland-based Novartis AG, which targets first-line treatment of CML, specifically for patients whose diseases respond to Gleevec but do not meet complete responses.

The companies initially signed a potential $515 million deal in March 2006 covering all bcl-abr inhibitors for CML but amended the agreement earlier this year to allow SGX the right to develop SGX-393 outside of the collaboration, subject to a reacquisition right of Novartis. (See BioWorld Today, March 29, 2006.)

The latest funding, along with existing cash and grant and collaboration revenue, should carry the company into the second half of 2009, though that doesn't take into account potential partnerships down the road. Grey said SGX currently is seeking a partner for SGX-523.

Lazard Freres & Co. LLC acted as the exclusive placement agent for the transaction, which is expected to close shortly.

Shares of SGX (NASDAQ:SGX) closed at $5.05 Tuesday, up 3 cents.

In other financings news:

• Exact Sciences Corp., of Marlborough, Mass., filed a $50 million shelf registration statement to raise, from time to time, funds to support working capital and other corporate purposes, including research and development activities, capital expenditures and potential acquisitions. Specific terms will be announced at the time of any offering. Exact Sciences develops DNA-based technologies for use in the detection of cancer, and is focusing on colorectal cancer as the first application. Shares of Exact (NASDAQ:EXAS) closed at $4.56 Tuesday, down 21 cents.

• Protox Therapeutics Inc., of Vancouver, British Columbia, received about C$7.6 million (US$7.7 million) of a potential C$7.7 million from the exercise of warrants issued as a result of the two tranches of a unit private placement financing closed on Nov. 4, 2005, and Nov. 17, 2005. That brings the company's current cash position to just over C$12 million, and Protox said, positions the firm to achieve milestones over the next year, including the advancement of Phase II programs in benign prostatic hyperplasia, brain cancer and prostate cancer.