Washington Editor

Hybridon Inc. raised $14.6 million in gross proceeds through a private financing, and reached an agreement with a majority of its Series A holders to liquidate preference stock.

The company's chief financial officer and vice president of operations, Robert Anderson, told BioWorld Today that both the moves will make a difference going forward, particularly regarding the attractiveness of Hybridon's stock. Located in Cambridge, Mass., Hybridon employs 27 people.

Proceeds are earmarked for research and development activities, including costs associated with Hybridon's two lead Phase I compounds - HYB2055, a second-generation CpG DNA immunomodulatory oligonucleotide, and GEM231, a second-generation antisense compound designed to inhibit protein kinase A. Both compounds are being studied in cancer.

As part of the financing, expected to net $13 million, Hybridon sold 20 million shares of common stock and warrants to purchase about 6 million shares of common stock. The warrants have an exercise price of $1 per share and will expire if not exercised by Aug. 28, 2008, the company said in a prepared statement.

In the second quarter ended June 30, Hybridon had $7.7 million in cash and 43.5 million common shares outstanding. The burn rate is about $1 million a month. Anderson believes the company has enough money to last about 18 months.

Hybridon also issued warrants to selected dealers to purchase 2.5 million shares of common stock at an exercise price of 73 cents per share and warrants to purchase about 1.3 million shares of common stock at an exercise price of $1 per share. Warrants must be exercised by Aug. 28, 2008.

Hybridon's stock (OTC BB:HYBN) closed Tuesday at $1.02, up 2 cents.

In other business, the company entered an agreement with holders of 59.3 percent of Series A convertible preferred stock to vote in favor of an amendment to Hybridon's charter that would reduce the per-share Series A liquidation preference from $100 to $1, reduce the Series A dividend rate and establish a 30-day period under which Series A holders could convert their shares.

According to the company, stockholders have agreed to convert 46.3 percent of outstanding shares of Series A convertible preferred stock into 9,837,478 common shares during the 30-day period following the amendment.

"We believe the virtual elimination of the Series A liquidation preference and the conversion of at least 46.3 percent of the Series A to common stock will be in the best interest of the company," Stephen Seiler, Hybridon's CEO, said in a prepared statement.

With approval of the amendment and conversion of at least 46.3 percent of Series A shares outstanding to common stock, the cumulative liquidation preference of the entire class of Series A convertible preferred stock remaining outstanding would be reduced from its current level of about $70 million to an amount not higher than $388,260.