* Warburg Pincus to become co’s largest shareholder
* Says to finance clinical activities for BPH treatment
* Protox shares up 14 pct
* Warburg Pincus members to assume Protox chairmanship
Sept 29 (Reuters) - Private equity firm Warburg Pincus will invest up to $35 million in Canada’s Protox Therapeutics PRX.TO to fund clinical activities of the company’s lead drug, making it the largest shareholder in Protox.
The investment, comprising an initial tranche of $10 million, which will give it a 21 percent stake in Protox, will be used to advance the company’s product candidate for the treatment of benign prostatic hyperplasia (BPH) into late-stage trials.
An additional $25 million will be invested, subject to the FDA granting a Special Protocol Assessment for BPH treatment, prior to Sept 30, 2011, the companies said in a joint statement.
Upon closing of the second tranche, and exercise of all warrants, Warburg Pincus would hold up to 59 percent of Protox’s outstanding shares.
The investment will be made through offering units of 40 cents apiece, where each unit is comprised of one common share of Protox and 0.6 common share purchase warrants, the statement said.
The initial $10 million investment is expected to close after a special meeting of Protox shareholders to be held by Nov 24.
Upon closing of the first tranche, two members of Warburg Pincus, with an independent biotech industry executive will replace three board members of Protox to assume chairmanship, the statement said.
Shares of Protox have shed about 18 percent of their value since the company said drug results for the BPH treatment were not statistically significant in June. [ID:nSGE6510FY]
They touched a high of 48 Canadian cents, before paring some gains to trade up 5 percent at 44 Canadian cents Wednesday afternoon, on the Toronto Stock Exchange. (Reporting by Gowri Jayakumar in Bangalore; Editing by Vyas Mohan)