By Mary Welch
Staff Writer
The door is wide open for biotechnology companies to go public as four companies filed for initial public offerings (IPOs), and more seem to be on their way.
I can definitely say that theres a lot more about to go public, said Robert Olan, life science analyst with Chase H&Q in New York. There is a genomics appetite and IPOs are flying off the shelf. I really cant explain it and I cant justify the evaluations. Theyre just feeding off themselves. I see this continuing for the first half of the year.
Filing for IPOs were Tanox Inc., of Houston, which intends to raise about $126 million, though it didnt disclose the price or shares being offered; InterMune Pharmaceuticals Inc., of Palo Alto, Calif., which hopes to offer 5.5 million shares at $14 to $16, for a gross of about $82.5 million prior to overallotment options; Drug Abuse Sciences Inc., of Menlo Park, Calif., and Paris, which is looking for $69 million; and Centaur Pharmaceuticals Inc., of Sunnyvale, Calif., which is seeking about $12.4 million through the sale of about 1.1 million shares at $11.50 per share.
Olan said many investors are putting their money into the genomics IPO market almost on blind faith.
The technology is complex and people are calculating or miscalculating that the next company is the one that will perform, he said. People who are afraid to invest in big pharma are going to genomics companies. Genomics companies are sexy stories. They will deliver long-term value in a sector that will have unlimited demand, namely first-class health care. Youre not looking for up-front profits and theres no threat of price controls. I think people are looking at genomics companies the way they have been looking and investing in all those dot-com firms.
Tanox estimated it will raise $126 million for research and development activities, as well as to finance possible acquisitions and investments in technology or products.
Tanox identifies and develops therapeutic monoclonal antibodies in the areas of immunology, infectious disease and cancer. Its most advanced product, an anti-immunoglobulin E, or anti-IgE, antibody is being developed in collaboration with Novartis Pharma AG, of Basel, Switzerland, and Genentech Inc., of South San Francisco. It has completed Phase III trials in both allergic asthma and seasonal allergic rhinitis and a biologics license application (BLA) is expected to be filed mid-year.
The company also is developing several monoclonal antibodies to treat other allergic diseases or conditions, such as severe allergic reactions to peanuts, autoimmune diseases, HIV and to restore the immune systems of chemotherapy patients with neutropenia.
Tanox has two products in Phase I/II trials: HU-901, a humanized anti-IgE monoclonal antibody that is being tested to reduce severe allergic reactions to peanuts; and 5D12, an anti-CD40 monoclonal antibody for Crohns disease.
Tanox generated 1999 revenues of $1.4 million, and had a net loss of $23.3 million. As of Feb. 1, it had 33.3 million shares of common stock outstanding. As of Dec. 31, it had $47.2 million in cash.
In December, the company raised $23.7 million in two private placements aimed at funding its pipeline. (See BioWorld Today, Dec. 14, 1999, p. 1.)
The lead underwriter for Tanox is CIBC World Markets Corp., of New York. Co-managers are Robertson Stephens, of New York; Warburg Dillon Read LLC, of New York; Adams, Harkness & Hill Inc., of Boston; and KBC Securities NV, of Brussels, Belgium.
InterMune Seeks Broader Actimmune Indications
InterMune intends to offer an overallotment option of 825,000 shares. It is estimating the offering will raise $101.2 million, assuming the overallotment is exercised.
InterMune intends to use its proceeds to commercialize new antibacterial and antifungal drugs for the prevention and treatment of pulmonary and infectious diseases. It currently markets Actimmune (interferon gamma-1b injection) in the U.S. for the treatment of chronic granulomatous disease.
In August, it filed a BLA supplement for the treatment of a second congenital disorder, osteopetrosis. The company is also looking at other indications, several of which are in mid- or advanced-stage clinical trials. It intends to start a Phase II/III pivotal trial during the first half of this year for idiopathic pulmonary fibrosis. InterMune said the market potential for Actimmune for all indications is $3.5 billion annually in the U.S.
Interferon gamma-lb, the active ingredient in Actimmune, is a human protein that plays a key role in preventing the formation of excessive scar, or fibrotic, tissue and is a potent stimulator of the immune system.
InterMune, which was formed in 1998 and began operations as a wholly owned subsidiary of Palo Alto, Calif.-based Connetics Corp., posted a 1999 net loss of $6.2 million. As of Dec. 31, 1999, the company had $4.2 million in cash.
As of Jan. 31, the company had 15.4 million shares outstanding. After this offering it will have 20.2 million outstanding.
Warburg Dillon Read LLC, of New York, is the lead underwriter. Other underwriters are Chase H&Q and Prudential Vector Healthcare Group, both of New York. It plans to trade on Nasdaq.
DrugAbuse Sciences Wants To Help Addicts
The third company throwing its hat into the IPO arena is DrugAbuse Sciences, which is hoping to raise $69 million. The company did not reveal the stock price. In the prospectus, it states that there are 12.5 million shares outstanding as of Jan. 20.
DrugAbuse Sciences is developing therapies for drug and alcohol abusers. It intends to use the financing for working capital and general corporate purposes.
In November, DrugAbuse raised $22.4 million from a group of European investors to further develop its compounds to treat addiction.
It is developing three products Naltrel, Buprel and Methaliz to improve existing medications. Other product candidates are intended to treat patients suffering from cocaine and methamphetamine overdose and addiction.
The company expects to start pivotal trials with Naltrel, a slow-release version of Naltrexone, a heroin antagonist, for the treatment of alcohol and heroin dependence this year. In the next 18 months, clinical trials are expected to start with Buprel and Methaliz for the treatment of severe heroin dependence. Another compound, COC-Ab, an antidote for treating the effects of cocaine overdose, also is expected to start clinical trials this year. (See BioWorld Today, Nov. 5, 1999, p. 1.)
For the first nine months of 1999, the company posted a net loss of $2.68 million. It had grant revenues of $921,288. The number of shares used in computing net loss per share was 2.1 million. The company had $3.6 million in cash as of Sept. 30.
Its proposed Nasdaq ticker symbol is DASI. Warburg Dillon Read LLC, of New York, is the lead underwriter. Robertson Stephen is the co-manager.
Centaur Developing Small-Molecule Compounds
Sunnyvale, Calif.-based Centaur, which develops a novel class of small-molecule compounds for the treatment of diseases that result from the interruption and subsequent restoration of blood supply, as well as inflammation, intends to raise $12.42 million by selling 1,080,000 shares of common stock at $11.50 each. The company intends to use proceeds to fund research and development as well as general corporate purposes.
The companys most advanced programs target diseases affecting the brain, such as acute cerebral stroke, Parkinsons disease, AIDS dementia complex and Alzheimers disease. The company expects to start Phase IIb/III trials in the U.S. of an orally administered compound, CPI-1189, for the treatment of Parkinsons disease and AIDS dementia.
The company posted revenues of $5.6 million for the first nine months of 1999 and a net loss of $9.86 million. As of Sept. 30, the company had $15.3 million in cash.
As of Dec. 31, Centaur had 15.6 million shares outstanding.
The underwriter is Bank J. Vontobel & Co AG, of Zurich, Switzerland.