Isis Pharmaceuticals Inc., apparently affected by a recentslow down in investor enthusiasm for biotechnologystocks, failed to sell all 3 million shares registered for itsfollow-on public offering and raised about $15 millionless than anticipated.
The Carlsbad, Calif.-based company grossed $25 millionthrough the sale of 2.5 million shares. Nearly 30 percent,or 700,000 shares, were bought by Isis' corporate partner,Switzerland-based Ciba-Geigy Ltd., as part of anagreement reached in September to expand their alliancein the development of antisense inhibitors to treat cancer.
When Isis registered for the public offering in August, itsstock was trading at $13 per share and the sale of 3million shares was expected to generate $39 million.
Instead last week the 2.5 million shares were priced at$10 each. Net proceeds were about $23 million. Isis'stock (NASDAQ:ISIP) closed Friday at $10, down 31cents.
This summer many biotechnology offerings were over-subscribed. The demand plus escalating stock pricessignaled a rekindling of interest among investors afterseveral years of skepticism toward the industry.
But Lynne Parshall, senior vice president of Isis, said ashift in investor mood in the last few weeks was obviouson the company's road show.
Wall Street analysts have cited a number of factors for thecurrent slowdown, including an overall decline in theNASDAQ market, whose composite index has slipped 46points in the last few weeks. (See BioWorld Today, Oct.4, 1995, p. 1.)
Added to the $65 million in cash Isis had June 30, 1995,the equity financing boosts its reserves to about $90million. For the first six months of this year, the companyreported a net loss of $11.8 million. Isis has 24.5 millionshares outstanding.
The public offering was managed by Vector SecuritiesInternational Inc., of Deerfield, Ill., and Lehman Brothersand Cowen & Co., both of New York. The underwritershave an option to purchase 375,000 additional Isis sharesto cover overallotments.
Isis has one compound in Phase III trials for AIDS-relatedcytomegalovirus retinitis and two others in Phase IIstudies, one for genital warts and the other for preventionof kidney transplant rejection.
The drugs are based on antisense technology aimed atinhibiting the function of messenger RNA to prevent theproduction of disease-causing proteins.
With the expansion of Isis' five-year-old partnership withCiba, the two companies now are collaborating on twocompounds designed to inhibit cancer tumor growth.Parshall said the alliance is significant for Isis in that theSwiss pharmaceutical maker "has asked us to develop thecompounds."
The drugs target two different multi-gene families that arebelieved to be involved in the spread of cancer. Isisexpects to file an investigational new drug applicationwith the FDA by the end of 1995 to begin clinical trialswith one compound, identified as ISIS 3521.
Parshall said the partnership with Ciba could be worth asmuch as $100 million to Isis in development costs,milestone payments and equity investments. Theagreement for both drugs also involves double-digitroyalties.
Prior to the follow-on offering, Ciba owned 1.5 millionshares of Isis. The purchase of another 700,000 sharesgives Ciba an about 8 percent equity stake. Germany-based Boehringer Ingleheim International GmbH, anotherIsis partner, also owns 8 percent of the biotechnologycompany. n
-- Charles Craig Staff Writer
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