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GEN News Highlights : Mar 21, 2012
Cytos to Secure up to CHF 37M to Advance Phase II Asthma Immunotherapy
Firm will also leverage funding to progress other Immunodrug candidates in its pipeline.!--h2>
Cytos Biotechnology says that it expects to raise up to CHF 37 million (about $40.56 million) in equity and debt. The round is being led by venBio and includes investments by Amgen, Abingworth, and Aisling Capital. The funds will enable Cytos to conduct a global multicenter Phase IIb trial with its lead product CYT003-QbG10 in patients suffering from allergic asthma as well as to advance the rest of its pipeline.
This transaction completes the financial restructuring announced in 2011, which also included the restructuring of the company’s outstanding convertible bonds. Last August Cytos cut 80% of its workforce and put all in-house programs not related to CYT003 on ice in order to keep solvent. Its partnered programs were not affected by this move. Although the plan was expected to reduce cash burn, Cytos had an outstanding convertible bond of nominal CHF 41.1 million, which was due on February 20, 2012, which prompted the bond restructuring.
CYT003-QbG10 has been shown in Phase I/IIa trials in allergic asthma and rhino-conjunctivitis to be well tolerated and efficacious. CYT003 is an allergen-independent immunotherapy with disease-modifying potential that could be used to treat a broad range of allergies, according to Cytos. It was developed on the company’s Immunodrug™ platform and targets toll-like receptor 9. This approach modifies the patient’s immunological response to allergens and has the potential to alter asthma therapy dramatically, Cytos says.
The firm will also use the funds to develop additional pipeline programs and progress its Immunodrug technology. Immunodrugs are designed to instruct the patient’s immune system to produce the desired therapeutic antibody or T-cell responses that modulate chronic disease processes.
CYT003 is the company’s lead candidate followed by in-house candidates CYT1006-AngQb for hypertension (Phase II), CYT013-IL1bQb for type 2 diabetes (Phase I), and preclinical compounds for inflammation and multiple sclerosis. The company also has partnered programs like one with Novartis that includes Phase II candidates NIC002 for smoking cessation and CAD106 for Alzheimer disease. Additionally it has collaborations with Pfizer in allergic diseases, A*Star for an influenza vaccine, and NIH for a malaria vaccine, all of which are in the preclinical stage.
Virus-like particles form the basis of the Immunodrug platform and are used as carriers for a wide variety of antigens. The target antigens may be disease-associated antigens derived from the body itself, so called self-antigens such as angiotensin II in hypertension or amyloid-beta in Alzheimer disease. They may also be molecules that are chemical entities (e.g., nicotine) or molecules derived from infectious agents (e.g., HIV, influenza virus).
The Immunodrug platform can be utilized in two different immunological ways: candidates can be designed that primarily activate B cells, where the antigens are directionally placed by chemical cross-linking onto the surface of the highly repetitive, crystal-like virus-like particles. The resulting Immunodrugs mimic a virus through this repetitive and particulate structure and are able to induce strong antibody responses against the selected antigens. Importantly, while the induced antibody responses have been shown to be long-lasting, they decline over time. This is an important safety feature of those Immunodrugs that target the body’s own molecules.
Alternatively, for therapeutic vaccination in indications such as allergy, cancer, and chronic viral infections, activation of T cells is of paramount importance. Besides the particulate and repetitive structure required for activation of B cells, efficient T-cell activation demands additional, nonspecific stimuli. To provide such stimuli, Cytos’ second Immunodrug platform uses virus-like particles filled with the immunostimulatory DNA sequence G10.
G10 is a synthetically produced short stretch of DNA originally derived from bacteria. This DNA sequence is recognized by toll-like receptors, which sound a signal to the immune system and in this way provide the immunological context necessary to promote T-cell activation. The resulting Immunodrugs (called QbG10) may be decorated with disease-related antigens for use in cancer or may be applied as a monotherapy (i.e., without any allergen) for the treatment of various allergies.
The financing of up to CHF 37 million committed by the investment syndicate will be a combination of CHF 23.75 million of equity (priced at CHF 1.87 per share, representing the 60-day average closing price prior to March 20) and CHF 13.25 million in secured convertible loan notes (with a conversion price of CHF 2.244 per share) payable in two tranches of CHF 6.625 million each, with the second tranche subject to Cytos achieving certain milestones in connection with the proposed Phase IIb study of CYT003.
Each investor of the investment syndicate will also receive one warrant (exercise price of CHF 2.244) for each new share subscribed for and issued. Furthermore, existing shareholders will be able to participate in this financing by way of a rights offering of up to an additional CHF 5 million.
Should all warrants be exercised, Cytos would receive additional cash of CHF 28.5 million and today’s investment syndicate would hold a total of approximately 80% of the then outstanding share capital.
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