Advanced Life Sciences

(ADLS)

announced Wednesday steps to push forward the development of its long-delayed antibiotic cethromycin.

The company made good on its commitment to complete the drug's filing with U.S. regulators by the end of the third quarter and to sign its first commercial partnership.

Wyeth

( WYE) will market cethromycin in Asia for the treatment of mild-to-moderate community-acquired pneumonia, the companies said Wednesday. The Asian marketing agreement excludes Japan, where

Abbott Labs

(ABT) - Get Report

has rights to the drug.

Additional clinical trials will be required before Advanced Life Sciences and Wyeth can seek regulatory approval for cethromycin in Asia.

Advanced Life Sciences also entered into a new round of debt and equity financing agreements aimed at shoring up the company's balance sheet so that it can remain in business until cethromycin is approved and revenue starts flowing.

Cethromycin belongs to the relatively new ketolide class of antibiotics used to treat respiratory infections.

Sanofi-Aventis'

(SNY) - Get Report

Ketek was the first Food and Drug Administration-approved ketolide, but reports of liver toxicities and patient deaths led regulators to place restrictions on Ketek's use last year.

Ketek worldwide sales totaled about $300 million in 2005, before the safety concerns and labeling restrictions.

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Safety concerns over the entire ketolide class of antibiotics has hampered and delayed efforts by Advanced Life Sciences to get cethromycin approved. These delays have been especially damaging to Advanced Life Sciences because of the company's precarious financial health.

The company finished the second quarter with $9 million in cash and was expected to burn through another $3.5 million in the third quarter just completed. Advanced Life Sciences owes Abbott a payment of $10 million now that cethromycin has been filed with the FDA.

In advance of Wednesday's announcement, Advanced Life Sciences shares were priced at 81 cents, down from $1.87 one year ago. The stock was up 5 cents to 86 cents in early Wednesday trading, amid continued uncertainty over cethromycin's approvability and the company's need to sign new partners, particularly in the U.S.

In exchange for Asian rights to cethromycin, Wyeth agreed to purchase a 4.9% stake in Advanced Life Sciences. Wyeth will also pay the company milestones and sales royalties on the future development and sales of the antibiotic.

At this point, Advanced Life Sciences is retaining European and North American rights to cethromycin, although further partnering deals are expected.

To shore up its near-term balance sheet, Advanced Life Sciences was able to boost an existing loan facility to $10 million from $4 million. The company also entered into an equity sales agreement that will allow for the sale of up to $15 million in common stock over the next two years.

Community-acquired pneumonia, or CAP, is the sixth most common cause of death in the United States. CAP and other respiratory tract infections are caused by pathogens such as Streptococcus pneumoniae and Haemophilus influenzae. CAP affects 5.6 million patients in the U.S. each year, with 10 million physician visits and 2 million hospitalizations occurring annually.

At the time of publication, Feuerstein's Biotech Select model portfolio did not contain any of the stocks mentioned in this article.

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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