NephroGenex has finally priced a stock offering to pay for more late-stage clinical trial work on its treatment for a deadly diabetes complication, but the company needed to slash its offering twice in order to pull it off.
Raleigh, NC-based NephroGenex [[NASDAQ: NRX) aims to raise $7.5 million from a secondary stock offering of 1.5 million shares priced at $5 per share. Underwriters have the option of purchasing an additional 225,000 shares of stock. The offering is expected to close on July 22. NephroGenex shares were trading at $4.75 Friday morning, down 16.6 percent from Thursday’s closing price.
NephroGenex has had a tough go at finding the right price to entice investors. When the company initially proposed its secondary stock offering in April, NephroGenex set a $30 million target, aiming to sell more than 4 million shares at $7.41 per share. NephroGenex cut that target in June, proposing to raise $13.5 million by selling 2.3 million shares at $6.34 per share.
NephroGenex is currently in Phase 3 trials evaluating a pill it calls Pyridorin. The drug was developed to treat diabetic nephropathy, a complication of diabetes that can damage the kidneys, leading to end-stage renal failure. At that point, patients may require dialysis, or even a kidney transplant. There are no FDA-approved treatments for diabetic nephropathy; the American Diabetes Association says the standard of care includes medications that manage blood pressure. NephroGenex says its drug works by blocking the formation of chemical compounds that contribute to kidney damage.
In earlier filings, NephroGenex said it would use proceeds from the stock sale to expand the Phase 3 trial from 61 sites to 150 sites worldwide. The company also said that the stock sale would finance an investigational new drug application for an intravenous form of the drug. With NephroGenex’s stock sale set to raise just $7.5 million, it’s unclear how far the funding will take the company. NephroGenex’s most recent filings give little detail on how it will spend the money, saying only that proceeds will be used for general corporate purposes. The company also says in those documents that it will need to raise additional money, explaining that based on current spending levels, it only has enough money to last through early 2016.
NephroGenex has a “special protocol assessment” for Pyridorin, which is essentially an agreement with the FDA on both the design of the trial, as well as how the data from the trial will be analyzed. Although these agreements are no guarantee of approval, they reduce the chance the agency will reject the drug—as long as the drug meets the agreed-upon targets. The NephroGenex drug also has “fast-track designation” from the FDA, a status that speeds the review of drugs that address unmet medical needs.
But there are other companies, some of them much larger and better financed, pursuing a diabetic nephropathy drug. AbbVie (NYSE: ABBV) and Janssen are in Phase 3 clinical trials with their respective treatments. Vascular Pharmaceuticals—a Research Triangle Park, NC, company spun out of the University of North Carolina at Chapel Hill—is currently in mid-stage clinical trials with its own experimental drug targeting the diabetes complication.
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