Washington Editor

This year's IPO class has added another member: Omrix Biopharmaceuticals Inc., which last week raised about $34 million in its initial public offering.

The commercial-stage company, of New York, sold about 3.4 million shares at $10 apiece. Its offering marked the tenth IPO this year. Omrix also granted the underwriters a 30-day, 516,000-share overallotment option.

Omrix, which was founded in 1995 as Omrix Biopharmaceuticals SA in Belgium, initially expected its stock to price between $15 and $17. The shares (NASDAQ:OMRI) lost 9 cents Thursday in its first day of trading, but closed Friday at $10.03.

The company could not be reached for comment.

Of the nearly $30 million in net proceeds generated by the IPO, about half will offset construction costs on a second manufacturing facility the company is building in Jerusalem. Another $8.2 million is allocated to paying down debt with double-digit interest rates, and $6 million will fund plans to expand its biosurgical product line and penetrate the Japanese market and elsewhere. The balance will go toward working capital and other general corporate purposes, such as acquiring complementary businesses, products or technologies.

Omrix said the net proceeds from the offering, along with existing cash reserves that totaled $6.5 million as of Dec. 31, would sustain operations for at least the next year.

The 150-person company's portfolio includes marketed immunotherapy products and similar investigational candidates that contain antibodies for treating or preventing certain diseases.

Among them is vaccinia immunoglobulin, or VIG, an intravenous product designed to treat smallpox vaccine-related complications that is sold to three governments. Under a contract with the UK's Department of Health, the company expects to receive about $20 million by the end of next quarter. Not yet approved is high-titer VIG (HT-VIG), a more concentrated form that can be used in smaller volumes for the same indication and for treating smallpox. Animal testing of HT-VIG, which can be administered intramuscularly by non-specialized medical personnel, began last quarter, and though clinical trials are not scheduled, the company said it would make filings with the FDA next year.

Two products are sold in Israel: intravenous immunoglobulin (IVIG) to provide ongoing treatment for immune system diseases and disorders, and hepatitis B immunoglobulin (HBIG), a product to prevent re-infection of a transplanted liver with hepatitis B virus in patients with chronic HBV infection. Still being investigated is West Nile virus immunoglobulin to treat severe infection with West Nile virus. It has orphan drug designation from the FDA; enrollment in a Phase I/II study is under way by the National Institutes of Health; and a biologics license application is projected for 2008.

Omrix also has its biosurgical product line for hemostasis, which is largely partnered with Ethicon Inc., a division of New Brunswick, N.J.-based Johnson and Johnson.

Ethicon markets a liquid fibrin sealant product, known as Crosseal or Quixil, which is used for hemostasis in surgical procedures. The companies are collaborating on the development of a second-generation liquid fibrin sealant, as well as a biological hemostatic dressing and a thrombin stand-alone product for general surgical use, primarily for neurosurgery. The companies' three-year-old relationship gives Ethicon exclusive sales and marketing rights to the hemostasis and sealing products. In addition, Ethicon pays most development costs and Omrix receives a percentage of all revenues from sales.

Omrix's new production facility is estimated to cost $25 million, and the portion not being paid with the IPO proceeds is being financed through bank loans. The site is expected to allow the company to expand its manufacturing capabilities for all its products and product candidates. Construction will last until 2009.

Before the offering, Omrix's principal shareholders included Founder, President and CEO Robert Taub, with about 24.4 percent, as well as two venture capital backers: Boston's MPM BioVentures I LLC, with about 22.4 percent, and Amsterdam's AlpInvest Partners NV, with about 6.1 percent. After the IPO, there were about 14.3 million shares outstanding.

New York's UBS Investment Bank is acting as the offering's sole book-running manager. CIBC World Markets, also of New York, is co-lead manager, with Boston-based Leerink Swann & Co. and New York-based Oppenheimer & Co. as co-managers.