Cadence Pharma pockets $86M in placement

In a new sign of a growing trend in biotechnology, Cadence Pharmaceuticals scored $86.6 million in a private placement of shares snapped up by a lengthy list of venture investors. In a deal significantly richer than its IPO two years ago, which raised $54 million, Cadence issued 12 million new shares at $7.13 a share and warrants on an additional six million shares at $7.84.

Venrock led the financing, which included Bay City Capital, Domain Associates, Frazier Healthcare Ventures, New Enterprise Associates, T. Rowe Price Associates and Versant Ventures. Their money goes to advance two late-stage therapies: Acetavance for pain and fever and Omigard for the prevention of catheter-related infections.

"It appears the activity in doing private investments in public companies has increased and part of that is driven by the valuations you see as share prices have fallen and values are depressed," Ted Schroeder, the CEO of Cadence, tells FierceBiotech. For the VCs, he adds, there's a shot at getting "venture-like returns" by investing in public companies. For a developer like Cadence, he adds, it's a way to raise a significant amount of money at a time shell-shocked public markets are a poor source of funds.

"I think it's a trend until the market rebounds," adds Schroeder.

Schroeder says he's positioning Cadence to look beyond a marketing application planned for Acetavance--which has finished clinical trials--as well as Omigard in the second quarter of this year. Schroeder says he expects an approval on both therapies, which would allow Cadence to start marketing the drugs in the U.S. Cadence is still waiting for late-stage data on Omigard.

- check out the Cadence release