Associate

Less than one month ago, OxiGene Inc.'s stock sat below $2 per share. Its 2003 high to that point was a Jan. 13 closing of $2.64.

But in the past month, riding its developing pipeline and a positive swell of biotechnology cancer interest, its stock has taken off. OxiGene on Tuesday said it had agreements with three institutional investors to sell 1.5 million shares at $10 per share, raising $15 million to fund its pipeline.

"The catalyst behind the financing is our lead compound, CA4P, which has advanced into a Phase II clinical trial," said Fred Driscoll, president and CEO of Watertown, Mass.-based OxiGene. "This year, we've entered the drug into two additional combination studies and received fast-track designation from the FDA. We felt it was important that we have the capital to move forward toward ultimate market acceptance of the drug.

"Our internal focus is to execute our milestones and our achievements, and I think that is why the stock price is where it's at," he added.

The $10-per-share price represents a roughly 22 percent premium to the five-day average closing price for OxiGene's shares through June 9 and a 12 percent discount to the five-day volume-weighted average price through that period. The company said it will receive $14 million after commission fees and expenses. Investors also will receive warrants to buy 375,000 shares, exercisable at $15 per share. If exercised in full, the warrants would bring in about another $5.6 million. Roth Capital Partners LLC, of Newport Beach, Calif., served as placement agent for the transaction.

OxiGene's stock (NASDAQ:OXGN) fell $2.32 Tuesday, or 16.8 percent, to close at $11.48.

Its Combretastatin A4 Prodrug (CA4P) is designed to work by affecting the microtubules in the cytoskeleton of endothelial cells lining the tumor vasculature. Through the disruption of the tubulin structure, the endothelial cells change shape and stop blood flow through the capillary, basically starving a tumor to death. The company focuses on vascular-targeting agents that might have applications in both tumors and certain ocular diseases. That platform, coupled with recent biotechnology events, might help explain OxiGene's fast stock rise.

In the third week of May, Genentech Inc., of South San Francisco, announced that its anti-angiogenesis drug, Avastin, "far exceeded" what the Phase III study was designed to show in metastatic colorectal cancer patients. That news not only boosted Genentech's stock, but also was seen as a long-awaited validation of anti-angiogenesis technology. The news lifted a slew of cancer companies that work to deprive tumors of blood, oxygen and nutrients. (See BioWorld Today, May 20, 2003.)

Quickly following that news was the annual American Society of Clinical Oncology meeting, held in Chicago, at which there were positive presentations for several cancer products, including full disclosure from the Avastin trial and news on Millennium Pharmaceuticals Inc.'s Velcade. Since then, investors have been taking another look at biotechnology cancer companies and at anti-angiogenesis companies in particular. (See BioWorld Today, June 3, 2003.)

OxiGene's rise has gone like this: On May 27 the company said Cancer Research UK, a cancer research organization, would collaborate on the final preclinical development of the OxiGene vascular targeting agent OXi4503. The news drove OxiGene's stock up $1.55, or 55.4 percent, to close at $4.35. On June 4, OxiGene said it received FDA fast-track designation for CA4P in advanced anaplastic thyroid cancer. Its stock leaped $3.29, or 83.5 percent, on that news. Days later, OxiGene said CA4P will be combined with two chemotherapy drugs in a Phase I/II trial involving patients with advanced ovarian cancer. Its stock rose $5.32, or 62.7 percent, on that day, June 9, to close at $13.80.

All in all, a very nice run. Looking ahead, Driscoll said one "clear objective for the company" is to license out a subset of its oncology and ophthalmology compounds. It ended its first quarter with $10 million in cash and marketable securities. While Driscoll wouldn't discuss current burn rates, in its first-quarter report the company said it expected a $5 million to $6 million net loss for 2003.

With CA4P moving through development, Driscoll said OxiGene is "at a very pivotal time in our lives." The same might be said for a lot of biotech companies, but the renewed investor interest in anti-angiogenesis and cancer companies might signify better times are ahead for the sector.

"Avastin has helped an awful lot," Driscoll said. "In the past, there have been more failures than successes [in anti-angiogenesis]. I think that [Avastin] re-energizes the idea that if you can meaningfully affect blood vessels, it is scientifically known you will cause cell death at the tumor site.

"It's helped a revival in the whole field, but I think that [AstraZeneca plc's] Iressa and Velcade were also good announcements that jump-started biotech."