Study will use lower dose of Zenvia to address safety concerns brought up in the FDA’s approvable letter.

Avanir Pharmaceuticals has obtained commitments to raise gross proceeds of $40 million in a registered direct offering. The firm reports that the funding will allow it to complete the investigation of its treatment for pseudobulbar affect (PBA), which is the subject of an FDA approvable letter.

At closing, Avanir will issue approximately 35 million shares at $1.14 per share with 35% warrant coverage. The firm opened trading today at $1.11.

The warrants represent the right to acquire up to approximately 12.2 million shares. They are exercisable at 125% of the offer price and have a five-year exercise term. Net offering proceeds are expected to be approximately $37.9 million, according to Avanir.

The proceeds from this transaction will be used to complete the confirmatory Phase III STAR evaluation of Zenvia. The company is utilizing a new lower quinidine dose formulation intended to address safety concerns raised in the Agency’s approvable letter. Results are expected in the second half of 2009, and a complete response is expected to be submitted to the FDA in the first half of 2010.

ProQuest Investments led the investment round and was joined by Clarus Ventures, Vivo Ventures, and OrbiMed Advisors. The transaction is expected to close around April 4.

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