Vasogen Raises $16M Ahead Of Celacade Launch In Europe

Canadian biotech Vasogen Inc. added $16 million to its coffers through a common stock sale to support ongoing work with its Celacade technology, including upcoming commercialization in Europe, and continued development of neuro-inflammatory drug VP025.

The company agreed to sell shares of its common stock priced at $3.25 each to institutional investors. That price is a premium to the stock's Thursday closing price of $3.19, but news of the offering still dropped Vasogen's shares (NASDAQ:VSGN) 13.8 percent, or 43 cents, to close Friday at $2.75.

Net proceeds are expected to total about $14.6 million and primarily will be used in three key areas, said Chris Waddick, chief operating officer and chief financial officer for the Mississauga, Ontario-based firm. The first area involves the commercial launch of Celacade in Europe with partner Grupo Ferrer Internacional SA, expected in the second half of this year. The companies formed a collaboration last month to market Celacade in chronic heart failure in the European Union and certain Latin American countries, with Vasogen to receive 45 percent of the revenues generated by Barcelona, Spain-based Ferrer for five years after the first sale, and 42 percent of revenues thereafter.

Celacade, a device designed to target the inflammation underlying chronic heart failure by exposing a patient's cells to oxidative stress, received CE Mark approval as a medical device in the European Union. It has not yet gained approval in the North America, and Waddick said that's the second key area designated in the recent financing.

"We have a meeting with the FDA scheduled at the end of this month," he told BioWorld Today, to discuss the regulatory pathway for Celacade in the U.S. A similar meeting with Canadian regulatory authorities is planned a little later.

The meeting is expected to focus on results from the 2,400-patient Phase III ACCLAIM (Advanced Chronic Heart Failure Clinical Assessment of Immune Modulation Therapy) trial, which missed its primary endpoint of significantly reducing the risk of death and cardiovascular hospitalization in the total population but "showed significant results in two key subgroups," Waddick said. Data from the study, reported in June 2006, showed that the primary endpoint was met in 692 patients with Class II heart failure, as determined by the New York Heart Association classification. That group demonstrated a 39.1 percent risk reduction. (See BioWorld Today, June 27, 2006.)

With those data in hand, Vasogen hopes to "get feedback from the FDA for filing a PMA [premarket approval] for commercialization" in the U.S., Waddick said. And once a regulatory pathway is determined, the company intends to begin partnering discussions for U.S. commercialization of the product.

Beyond Celacade, the third area earmarked for funding is Vasogen's neuro-inflammatory program, led by VP025, a bilayered phospholipids microparticle aimed to induce an anti-inflammatory response by mimicking apoptosis. Preclinical models demonstrated potential efficacy in Parkinson's disease, Alzheimer's disease, amyotrophic lateral sclerosis and diabetic retinopathy. VP025 was found to be safe and well tolerated in a Phase I study, and the company plans to move into Phase II testing soon.

Proceeds from the financing are expected to "take us into mid-2009," Waddick said.

Under the terms of the offer, Vasogen also will issue five-year warrants to purchase an additional 3. 7 million shares priced at $3.16 each, and, if all those warrants are exercised, the firm could realize another $11.7 million in proceeds. The transaction is expected to close on or around May 24.

Following the offering, Vasogen will have about 22.4 million shares outstanding.

Rodman & Renshaw LLC and JMP Securities LLC are acting as placement agents, and Rodman & Renshaw LLC managed the placement and sale of the securities.

In other financings news:

• Arrowhead Research Corp., of Pasadena, Calif., agreed to sell 2.8 million units consisting of restricted common stock and warrants to purchase common stock to York Capital Management, an institutional money manager, and selected investors. Under the terms, investors will purchase shares priced at $5.78 each, and will receive warrants to buy an additional 712,362 shares at an exercise price of $7.06 per share. Gross proceeds to Arrowhead are expected to total about $16.5 million, which will be used primarily to expand operations at the company's majority owned subsidiary, Unidym, and to make investments in nanotechnology ventures. Global Crown Capital LLC acted as exclusive placement agent. Shares of Arrowhead (NASDAQ:ARWR) closed at $7 Friday, up 41 cents.

• Genitope Corp., of Fremont, Calif., said Punk, Ziegel & Co., the underwriter of its recent follow-on offering of 5.5 million shares exercised its overallotment option for 510,279 additional shares of common stock, bringing the total of shares sold to about 6 million, each priced at $3.85. Net proceeds to the company came to about $21.6 million. Genitope, which develops immunotherapies for cancer, is working on its lead program, MyVax, a personalized immunotherapy designed to be patient-specific immune system activator, based on the genetic makeup of a patient's tumor. The company's stock (NASDAQ:GTOP) gained 5 cents Friday to close at $3.62.