Organogenesis Inc. filed a shelf registration statement with the SEC in order to raise up to $50 million, the proceeds of which are earmarked for general corporate purposes.
"We will not sell more than 10 percent of the company," said Alan Tuck, Organogenesis' chief strategic officer. "That's the beauty of a shelf registration - it offers flexibility. We don't want this to be a very dilutive effort, and we're not saying we want to raise $50 million or sell 3 million shares. We just want to be in a good position if and when we decide. And, we don't have to do it all at once. We could raise some money in the first quarter and some in the second or third - whatever.
"Another advantage of a shelf registration is that we don't have to say what kind of stock we'd sell. It could be common shares, or it could be warrants or convertible preferred stock."
Tuck said the market is conducive to raising money for biotechnology companies, and said Organogenesis will benefit from this turn of events.
"I think it is a good time to raise money," he said. "I think you can see that other biotech companies are firming up their positions now. The money is out there. We just want to be in a position so that we can respond to the market when it becomes responsive to what we have to say."
Organogenesis will have "some good news to talk about in the next 30 days or so," including presenting at the Hambrecht & Quist conference in San Francisco next month, he said.
The Canton, Mass.-based company has enough cash to finance operations into 2000, Tuck said. It said in the filing that it would not sell more than 3 million shares. Organogenesis' stock (AMEX:ORG) closed Tuesday at $8.437, down 68.75 cents.
For the third quarter of 1999, which ended Sept. 30, the company reported a net loss of $6.5 million, with revenues of $946,000. The company had about $14 million cash on hand. Organogenesis had 30.7 million shares of common stock outstanding as of Dec. 20.
The company's only marketed product is Apligraf, which is approved for the treatment of venous leg ulcers. The company earlier this month filed a premarket approval application for Apligraf in treating diabetic foot ulcers. (See BioWorld Today, Dec. 23, 1999, p. 2.)
"The FDA has six months to rule on the PMA and all the data is quite compelling," Tuck said. "But trying to guess the FDA has been a graveyard for biotech executives."
Apligraf is an all-natural bilayered skin construct, with both an upper epidermal and lower dermal layer. The product was approved in May 1998 and is being marketed by Organogenesis' partner, Novartis AG, of Basel, Switzerland. (See BioWorld Today, May 27, 1998, p. 1.)
"Our volume sales of Apligraf are increasing," Tuck said. "November was a record month in terms of unit volume growth [with sales of 755 units]. We filed the PMA last week and we are clearly getting some results in the reimbursement category. Each of these three things reinforces each other."