BioWorld International Correspondent

Pharming Group NV is raising more than €25 million and converting €5.8 million of debt to equity.

The Dutch biotechnology firm, which has struggled financially and emerged from court protection in October 2002, plans to use proceeds for general corporate purposes and to continue development of its lead product, a recombinant form of human C1 inhibitor (rhC1INH).

The product is about to enter a Phase III trial for management of acute attacks of hereditary angioedema, a genetic disease that results in the swelling of soft tissues found in the mouth, throat and gut.

Leiden-based Pharming has received commitments from new and existing investors totaling more than €25 million. It will issue about 18 million new shares, priced at €1.40 per share, or its average share price during the 20 days preceding Jan. 15. The underwriters received an option to purchase 15 percent of the shares. Participants also will receive warrants with the right to purchase an additional 15 percent of shares within the next 12 months at a strike price of €2 per share.

The debt-to-equity conversion will result in issuing 9.25 million new shares, with prices ranging from €0.50 to €1.20 per share. The transaction will virtually eliminate the company's debt, apart from a €300,000 million mortgage and normal trade-related obligations. The company, which held around €2.5 million in cash at the end of the year, has about 38.4 million shares outstanding.

About a month ago, Pharming said it would seek €5 million to €10 million, but discovered it could raise more, it said.

"After we decided at the board meeting in December to go out and raise some new funds, we found the interest to participate was quite high," Pharming Chief Business Officer Rein Strijker told BioWorld International. "We have a product that addresses quite a significant market, that is in late-stage clinical development [and] for which we own all the rights."

Baxter International Inc., of Deerfield, Ill., originally had a license to rhC1INH, but the agreement was terminated when Pharming entered court protection in August 2001. The "dramatic turnaround" that the company executed since then was another positive factor that aided the current investment round, Strijker said.

Pharming now is seeking a new development partner for the product.

"We are in discussions with partners, but those discussions are no longer driven by our financial needs," Strijker said. In parallel, the company is finalizing preparations for the Phase III trial, which will involve about 50 patients. The compound, which is secreted in the milk of transgenic rabbits, has orphan drug status. There are, Strijker said, about 30,000 individuals with the condition in the U.S. and Europe.

"The disease is not being treated right now in most markets," he said. Some patients with a severe form of the disease receive androgen therapy as prophylaxis, but the side effects can be severe. Intravenous administration of C1 inhibitor purified from human blood also is used to manage acute attacks, but those drugs have not received approval across all European countries. The company is seeking regulatory approval in Europe initially and aims to have its product on the market next year.