Cadence Raises $86.6M in Private Stock Offering
Cadence Pharmaceuticals just proved that you can raise a lot of money in biotech if you’ve already passed the test in a pivotal clinical trial. The San Diego-based biotech company has entered an agreement to raise $86.6 million mostly from a group of venture capitalists who are better known for investing in companies at earlier, and riskier, stages of development.
The financing was led by Venrock Associates, and included Frazier Healthcare Ventures, Domain Associates, Versant Ventures, New Enterprise Associates, Bay City Capital, and T. Rowe Price Associates. The investors agreed to buy 12 million new shares of common stock for $7.13 a share, on par with the price Cadence (NASDAQ: CADX) closed at on Friday. The deal is expected to close tomorrow, the company said.
Cadence’s shares have climbed since Dec. 17, when it announced that it had succeeded in all three clinical trials it needs to satisfy FDA that it has developed an effective new painkiller drug. The company is working now to put together an application for approval of the intravenous form of acetaminophen, which it plans to market as Acetavance. The drug will be pitched to hospitals as a safer alternative to opioid-based pain relievers that can be addictive and cause constipation and other side effects. Acetaminophen, commonly marketed over the counter as Tylenol, is one of the world’s most commonly prescribed drugs, with about 2 billion doses a year given in U.S. hospitals alone. The drug could generate $800 million in peak annual sales in the U.S., Cadence CEO Ted Schroeder told me in an interview last fall.
Cadence had about $63 million in cash at the end of September, so the new infusion will more than double the size of its bank account as it builds a sales force and prepares to market the drug. Shares of Cadence climbed another 6 percent, to $7.55 at today’s close after the announcement.