CombinatoRx CFO says $47.97 million PIPE will finance phase 2 trials

By Sheri Kasprzak

New York, March 27 - CombinatoRx, Inc. plans to direct the proceeds raised from a $47.97 million PIPE that closed Friday to fund several phase 2 clinical trials, said Robert Forrester, the company's chief financial officer, in an interview Monday.

"[The PIPE] was a very efficient way of raising capital," Forrester said. "We have a lot of phase 2 data and we're navigating between phase 2 and phase 3 trials of most of our products. The PIPE allowed us the flexibility and speed that we couldn't get from a follow-on offering. We didn't raise as much as we should have in our IPO."

CombinatoRx completed its $44.3 million initial public offering in November, selling 6,328,571 shares at $7.00 apiece. The company had originally planned to raise $72 million in the IPO.

CombinatoRx currently has seven products in phase 2 clinical trial, and Forrester said the company is hoping to move some of those products to phase 2b next year.

In the placement, as previously reported, a group of institutions bought 4.68 million shares at $10.25 each, a 7.6% discount to the company's closing stock price of $11.10 on March 22.

Cowen & Co., LLC was the bookrunner for the deal.

"We're thrilled," Forrester said of the slight discount. "It's a very slight discount."

The private placement was conducted at this time, Forrester said, to encourage trading volume of its stock.

"Volume has been very light since our IPO," Forrester said. "We've not been trading at the levels we wanted to be. It was a good opportunity to attract additional capital."

As of Friday, the company's average trading volume was 62,375 shares. On Monday, the trading volume was 206,580 shares.

On Monday, the company's stock made a comeback to gain 8 cents, or 0.73%, after sustaining a slight drop earlier in trading, to close at $11.06 (Nasdaq: CRXX).

The stock gained 48 cents on Friday to close at $10.98.

The investors in the offering include T. Rowe Price Health Sciences Fund, Inc.; T. Rowe Price Health Sciences Portfolio, Inc.; John Hancock Trust - Health Sciences Trust; Raytheon Co. Combined DB/DC Master Trust - Health Sciences; UBS O'Connor PIPEs Corporate Strategies Master Ltd.; T. Rowe Price New Horizon Sciences Fund; Valic Co. I - Health Sciences Fund; TD Mutual Funds - TD Health Sciences Fund; Steeple Capital Offshore Fund, Ltd.; Steeple Capital Offshore Fund III, Ltd.; Steeple Capital Fund I, LP; Steeple Capital II, LP; and Special Situations Fund III, LP.

Other investors include: Special Situations Life Sciences Fund, LP; Special Situations Cayman Fund, LP; Special Situations Private Equity Fund, LP; Special Situations Fund III (QP), LP; Quantum Partners LDC; SF Capital Partners Ltd.; QVT Fund LP; ProMed Offshore Fund, Ltd.; ProMed Offshore Fund II, Ltd.; ProMed Partners, LP; ProMed Partners II, LP; Millennium Partners, LP; Kamunting Street Master Fund, Ltd.; Integral Capital Partners VII, LP; Fort Mason Partners, LP; and Fort Mason Master, LP.

Also investing were: DWS Biotech Invest; DWS Biotechnology; Domain Public Equity Partners, LP; Clariden Biotechnology Equity Fund Guerney; Clariden Lux Biotechnology Fund (Sicav); Visium Long Bias Offshore Fund, Ltd; Visium Long Bias Fund, LP; Visium Balanced Offshore Fund, Ltd.; Visium Balanced Fund, LP; Atlas Master Fund, Ltd.; SRI Fund, LP; CAP Fund, LP; BBT Fund, LP; AXA Premier VIP Aggressive Equity Portfolios; and Abingwroth Management Ltd.

Boston-based CombinatoRx develops treatments for cancer, immuno-inflammatory disease, metabolic disease and neurodegenerative disease.

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