OS Therapies Announces $6 Million Private Placement to Fund Clinical Development of OST-HER2 for Osteosarcoma and Other Cancer Indications
OS Therapies, a clinical-stage biotechnology company focused on developing innovative cancer immunotherapies and antibody-drug conjugates, has successfully closed a private placement financing, securing approximately $6 million in gross proceeds. These funds will be directed primarily toward supporting the clinical and regulatory milestones necessary for the commercialization of OS Therapies’ lead candidate, OST-HER2, a promising therapeutic for recurrent, resected metastatic osteosarcoma. The company also plans to use the capital to cover general corporate expenses, all while remaining focused on advancing its strategic goals.
A Breakthrough in Pediatric Cancer Treatment: OST-HER2
OST-HER2 is an innovative antibody-drug conjugate that targets the HER2 receptor, which is often overexpressed in various forms of cancer, including osteosarcoma. In recognition of its potential, the U.S. Food and Drug Administration (FDA) has granted OST-HER2 several significant designations: Rare Pediatric Disease, Fast Track, and Orphan Drug. These designations are expected to expedite the development process, allowing OS Therapies to bring this novel treatment to market as quickly as possible to address the urgent medical needs of pediatric osteosarcoma patients.
Paul Romness, MHP, Chairman and CEO of OS Therapies, expressed his optimism about the funding, stating, “We expect the capital raised in this financing to support our operations through 2026. By that time, we believe we will have delivered the necessary clinical data and met the Biologics License Application (BLA)-enabling requirements to secure approval from the U.S. FDA for the commercialization of OST-HER2 in the United States.”
The Significance of the Priority Review Voucher (PRV) Program
One of the key incentives for OS Therapies is the potential to earn a Priority Review Voucher (PRV) upon FDA approval of OST-HER2 for the treatment of recurrent, resected metastatic osteosarcoma. The PRV program was established by the FDA to encourage the development of treatments for rare pediatric diseases, like osteosarcoma. A PRV allows the sponsor to receive expedited review for another drug, which can significantly reduce the time to market. Moreover, the voucher is transferable, meaning it can be sold to another company.
The current market for PRVs is highly lucrative, with the latest public sale of a PRV taking place on November 27, 2024, when PTC Therapeutics sold its voucher for $150 million. Historically, the value of PRVs has been substantial, with the highest price recorded in 2015 when AbbVie purchased a PRV from United Therapeutics for $350 million.
OS Therapies anticipates that the PRV it earns upon approval of OST-HER2 for osteosarcoma could be worth a similar amount. As a result, the company sees the potential sale of the PRV as a significant financial opportunity, providing additional capital to further expand its clinical development pipeline.
Challenges and Opportunities for OS Therapies
Despite recent setbacks in the U.S. House of Representatives’ negotiations over the reauthorization of the PRV program for pediatric cancers like osteosarcoma, OS Therapies remains confident that it will be able to take full advantage of the program. This is due to the fact that OST-HER2 received its Rare Pediatric Disease designation from the FDA prior to the December 20, 2024 deadline. As long as the company achieves FDA approval for OST-HER2 before September 30, 2026, it will be eligible to receive the PRV, even if the broader program is not reauthorized.
In light of this, OS Therapies is focused on completing the necessary clinical trials and regulatory steps to secure FDA approval for OST-HER2. The company believes that it can achieve this goal by 2025, positioning OST-HER2 as a groundbreaking treatment option for children suffering from osteosarcoma, a particularly aggressive and rare form of bone cancer.
Details of the Private Placement Financing
In connection with the financing, OS Therapies sold 1.5 million units at a price of $4.00 per unit. Each unit consists of one share of Series A Senior Convertible Preferred Stock, which is convertible into one share of common stock, as well as one warrant to purchase one additional share of common stock. The conversion price for the Preferred Stock is $4.00 per share, and the exercise price for the warrants is set at $4.40 per share.
The private placement was managed by Brookline Capital Markets, a division of Arcadia Securities, LLC, with Ceros Financial Services, Inc. acting as a selected dealer to the placement agent.
Securities Registration and Compliance
It is important to note that the securities sold in this private placement, as well as the common stock into which they may be converted or exercised, have not been registered under the Securities Act of 1933 or any state securities laws. Consequently, these securities cannot be offered or sold in the United States unless they are registered or qualify for an exemption from the registration requirements of the Securities Act. To facilitate future resales of the securities, OS Therapies has committed to filing a registration statement with the U.S. Securities and Exchange Commission (SEC) to register the shares of common stock that are underlying the securities issued in the placement.
The company also clarified that this announcement does not constitute an offer to sell or a solicitation of offers to buy the securities in any state or jurisdiction where such offers would be unlawful before they are properly registered or qualified.
OS Therapies’ Long-Term Vision
Looking ahead, OS Therapies is determined to transform the treatment landscape for pediatric cancer, specifically osteosarcoma, with its novel approach to targeted cancer therapies. By leveraging the power of its lead candidate OST-HER2, combined with the support of strategic funding and the potential of a Priority Review Voucher, the company believes it is poised for long-term success in the fight against rare pediatric cancers.
In addition to its ongoing clinical trials for osteosarcoma, OS Therapies is also evaluating the expansion of OST-HER2 into other HER2-positive cancers, such as breast cancer and colorectal cancer. Should the company succeed in this venture, it could expand the impact of its treatment, offering new hope to patients suffering from these widespread and often difficult-to-treat cancers.
