Avanir Pharmaceuticals Inc., an Aliso Viejo drug maker, has raised $40 million through a sale of its shares to investors.
Avanir plans to use the money to complete a clinical trial on its Zenvia drug candidate for treating involuntary emotional expression disorder, which is marked by uncontrollable laughing or crying.
ProQuest Investments of San Diego and Princeton, N.J., led the investment, which was done as a private investment in public equity, or PIPE, deal.
Palo Alto-based Vivo Ventures, OrbiMed Advisors of New York and Clarus Ventures, which has offices in San Francisco and Boston, also are joining the deal.
Avanir expects the proceeds of the offering to be about $38 million.
The company expects results of the Zenvia trial, which involves a new formula, in the second half of 2008.
It plans to send a complete response to the Food and Drug Administration in the first half of 2010.
Avanir, which moved to Aliso Viejo from San Diego in 2006, had seen several costly regulatory setbacks with Zenvia, including FDA safety concerns about an ingredient in the compound.
On the same day that Avanir announced the financing, the company said separately that it had received a letter from Nasdaq officials notifying it that for the previous 10 consecutive trading days the market value of its stock had been below the minimum $50 million required.
Avanir said that after the offering was completed, the market value of its stock would regain compliance within the 30-day period Nasdaq requires.
The deal was expected to close last week.
Device Stocks Lackluster
A Goldman Sachs & Co. research report released late last month predicted that shares of medical device makers are likely to stay flat this year and be outperformed by the overall market.
Medical device stocks overall have come in about 5% lower than the Standard & Poor’s 500 since the start of 2008, Lawrence Keusch said in his note.
“The underperformance has been driven by an unsustainable rally for healthcare equities in the first two weeks of the year, late-winter concerns that the Democrats were gaining in popularity, sparking fears of cuts to healthcare spending and rotation out of large-cap pharma following the issues on Vytorin,” Keusch said.
Sales of Vytorin, a cholesterol drug jointly marketed by Pfizer Inc. and Schering-Plough Corp., fell more than 17% since a January clinical trial showed that the drug was no more effective than a generic version of one of Vytorin’s active ingredients in lessening users’ risk for stroke or heart attack.
Keusch lowered his price target on Santa Ana-based Advanced Medical Optics Inc. from $21 to $23 and reaffirmed a neutral rating on the maker of eye surgical devices and contact lens care products.
He cited a slowing economy and other factors for his decision.
Shares of Advanced Medical were trading at about $20 last week with a market value of $1.2 billion.
Keusch also addressed the Cooper Cos., which moved last year from Lake Forest to Pleasanton. The analyst reaffirmed his “neutral” rating on the maker of contact lenses and women’s surgical equipment, but lowered his share price target to $35 from $40.
Cooper was trading at about $35 last week with a market value of $1.6 billion.
He cited management credibility and risks as Cooper ramped up its manufacturing capacity.
Rotech Faces Delisting
Rotech Healthcare Inc., a Florida home health company led by a former chief executive of Lake Forest-based Apria Healthcare Group Inc., said last month that its listing on Nasdaq’s Capital Market is being reviewed.
Rotech, in a statement, said it fell short of Nasdaq’s requirement that it had a minimum of $2.5 million in stockholders’ equity or $35 million in the market value of its listed securities or $500,000 of net income from continuing operations in order to be listed on the Capital Market exchange, which lists stocks of small market value companies.
Rotech is run by Philip Carter, former chief executive of Apria.
Carter and current Apria Chief Executive Lawrence Higby (see story, page 3) worked together to turn Apria around in the late 1990s.
Bits and Pieces:
Irvine device maker BioLase Technology Inc. said the Food and Drug Administration cleared its Waterlase and Waterlase MD systems for disinfecting root canals. BioLase said the lasers can replace traditional bleach disinfection after root canal procedures UCI Medical Center in Orange said it is participating in a clinical study looking at an alternative to gastric bypass surgery and other more invasive forms of treating obesity. The study is centered on a medical device that doesn’t alter the stomach’s anatomy. Instead, it uses laparoscopically implanted electrodes that block signals between the brain and digestive system that control hunger.
