Pharmaxis taking up full $42m financing deal

Pharmaxis (ASX:PXS) has chosen to receive the full US$40 million ($42.1 million) investment under its financing agreement with NovaQuest Pharma Opportunities Fund III.

The company will use the funds to continue to pursue US approval for its Bronchitol treatment in cystic fibrosis.

The US FDA is requiring Pharmaxis to conduct a new phase III trial before it will approve the company’s New Drug Application, citing inadequacies in the efficacy data from the first two phase III trials.

NovaQuest invested an initial US$20 million in Pharmaxis in January. Under this agreement, NovaQuest arranged to invest up to a further US$20 million, unless Pharmaxis chose to reduce the additional investment.

In exchange, Pharmaxis will pay NovaQuest a proportion of Bronchitol sales for cystic fibrosis in the EU and the US for terms of eight and seven years respectively. The size of these payments would have been reduced if Pharmaxis had chosen to lower the size of the follow-up investment.

Pharmaxis will receive the additional US$20 million investment after it randomises the first patient into the upcoming phase III trial.

Bronchitol is already available in Australia and parts of Europe for cystic fibrosis. Pharmaxis is also developing Bronchitol for bronchiectasis, but in April, a phase III trial failed to meet its primary endpoint for reducing pulmonary exacerbation rates.

Pharmaxis (ASX:PXS) shares were trading 3.85% lower at $0.125 as of around 1.30 pm on Thursday.