Investors delivered in a big way for Penwest Pharmaceuticals Co., purchasing $52.7 million worth of stock over a two-day period.

The Danbury, Conn.-based drug delivery firm raised net proceeds of $49.4 million in two separate private placements, first selling about 1.9 million shares at $21 apiece followed by a sale of 603,000 shares at the same price. The two sales grossed $40 million and $12.7 million, respectively.

"We didn't plan it that way, but after we closed it Friday night and announced it Monday morning, we had several long-term shareholders who also wanted to be included, though we had not been able to connect with them Friday," Penwest Chairman and CEO Tod Hamachek told BioWorld Today. "We held part of it open for them, resulting in a second leg [of the placement]. And they have the same terms - there are no differences."

On Tuesday, Penwest's stock (NASDAQ:PPCO) lost 34 cents to close at $21.47.

The company also granted additional purchasing rights. First-sale buyers can acquire up to an additional 380,952 common shares at $26 apiece, an option exercisable 90 days after the closing date or, if earlier, upon the effectiveness of a registration statement for the resale of the common stock that will expire 60 trading days after the effectiveness of such a registration statement. Buyers from the second sale are eligible to pick up 120,600 additional common shares under the same terms.

The company lost $7.6 million in its last fiscal quarter, alongside $1.2 million in revenue. Penwest also reported $25.8 million in cash and short-term investments through the period ended June 30, as well as 15.6 million shares outstanding. Hamachek said the firm's burn typically runs at about $4.5 million per quarter, meaning the financing extends its operations for several years beyond current reserves.

"It really comes down to a judgment call as to when to go," Hamachek said, adding that the company didn't want to wait to raise funds beyond Labor Day, after which he expects others in the sector to look toward equity financing as well. "Our stock price was near an all-time high, and we felt the equity markets were vigorous enough to approach."

The company said it would use net proceeds to fund general corporate purposes such as research and development, as well as for marketing and commercialization activities surrounding its lead product, oxymorphone ER (extended release).

Submitted to the FDA late last year in a new drug application, the product was developed in partnership with Chadds Ford, Pa.-based Endo Pharmaceuticals Inc. Penwest applied its TimeRx technology to the extended-release opioid analgesic product. (See BioWorld Today, Dec. 23, 2002.)

"The PDUFA date is Dec. 19, and Endo said it expects to have some kind of hopefully approvable letter by that time," Hamachek said. "They could hear as early as late October and they hope to go to the market in the first quarter."

Endo has exclusive sales and marketing rights in the U.S., but beyond American borders both companies will jointly determine such strategy on a country-by-country basis, Hamachek added. Though he labeled oxymorphone ER Penwest's best near-term revenue driver, he declined to provide royalty guidance from sales.

The company calls TimeRx the foundation of its oral controlled-release platform, which is designed to produce drugs with less-frequent dosing schedules, better performance and fewer side effects. From it, Penwest has developed Geminex, a dual drug delivery system that releases combined drug actives, and SyncroDose, a chronotherapeutic drug delivery system that releases a drug at a specific site and time.

Beyond oxymorphone ER, the company is developing PW2101, which is in a Phase III program for hypertension. Penwest owns all rights to the product but expects to partner it during the first half of next year. Hamachek said the company hopes to cull data by the end of this year or early next, with plans for regulatory submission by next summer.

Another internally developed product is PW4103, in a Phase I program for premenstrual migraines.

Other projects continue in partnership with various collaborators. A new drug application is on file at the FDA for PW3101, an oral small molecule for asthma developed with Miami-based Ivax Corp. Penwest also is developing an undisclosed product in partnership with Cambridge, UK-based Arakis Ltd.