Hana Biosciences Inc. signed a loan agreement with Deerfield Management that will provide access to $7.5 million up front and up to $30 million in total over three years.

Investors seemed to like the arrangement, which gives South San Francisco-based Hana money to fund its cancer clinical trials without accessing the public markets at an undesirable stock price. Hana's shares (NASDAQ:HNAB) rose 18 cents, or 14 percent, to close at $1.50 on Wednesday, still a far cry from the company's 52-week high of $8.64 thanks to a handful of setbacks earlier this year.

Chief among those setbacks were manufacturing issues that led to the withdrawal of a new drug application for Zensana (ondansetron HCI), an oral spray to prevent nausea and vomiting associated with chemotherapy, radiation and surgery. At the same time, Hana announced that the FDA would not designate special protocol assessment status for a Phase II trial of Marqibo (vincristine sulfate liposomes injection) in acute lymphocytic leukemia and that the National Cancer Institute discontinued a Phase I trial of cancer drug Talvesta (talotrexin for injection) due to toxicity issues. (See BioWorld Today, March 26, 3007.)

Hana subsequently monetized Zensana, out-licensing it to Par Pharmaceutical Cos. Inc. in exchange for a $5 million equity investment and up to $45 million in regulatory and sales milestones. (See BioWorld Today, Aug. 2, 2007.)

Meanwhile, Hana moved Marqibo into its planned ALL trial and expects to initiate a Phase III ALL trial next year, as well as another trial this year in uveal melanoma. The company also is conducting a Phase I cancer trial with Alocrest (vinorelbine tartrate liposomes injection). By the end of the year, Hana intends to move two more products toward the clinic, beginning a Phase I with cancer drug Brakiva (topotecan hydrochloride liposomes injection) and filing an investigational new drug application for cancer-associated skin rash drug Menadione.

The Deerfield loan will help fund those programs. Hana can draw down the money at predetermined intervals over the three-year loan period, although $10 million is tied to the achievement of product-related milestones. Interest accrues at an annual rate of 9.85 percent, and repayment is due by October 2013.

As part of the deal, Hana paid Deerfield a 3.5 percent cash commitment fee. Deerfield also received six-year warrants to purchase approximately 5.2 million shares of Hana's common stock at an exercise price of $1.31 per share. Hana will issue additional warrants if it draws on the $10 million portion of the loan tied to product milestones.

Hana reported $21 million in cash, equivalents and short-term investments as of June 30.

In other financing news:

• Merrion Pharmaceuticals Ltd., of Dublin, Ireland, lowered the anticipated price range for its proposed initial public offering of 4 million shares. The company now expects to price its shares between $6 and $7 per ADS and between €4.21 and €4.91 per ordinary share, down from the previously stated range of between $10 and $12 per ADS and between €7.41 and €8.91 per ordinary shares. Merrion applied to list its shares on Nasdaq under the ticker "MERR" and on the Irish Enterprise Exchange under the ticker "3MP." Proceeds from the offering would fund Phase II and Phase III programs for MER 101 in metastatic bone cancer and for MER 104 in prostate cancer, as well as Phase II trials of MER 102 in deep-vein thrombosis. (See BioWorld Today, April 3, 2007.)