Zeltia Group grossed €65 million (US$78.3 million) in an institutional placing to fund development and commercialization of the cancer pipeline of its PharmaMar SA subsidiary.
The Madrid, Spain-based firm issued 10.75 million shares, priced at €6.05 per share, a discount of just €0.25 to its share price immediately prior to the deal. The transaction took the form of an accelerated book-build. The sole bookrunner was HSBC Securities, which has an overallotment option to purchase an additional 750,000 shares. If exercised, that would add another €4.5 million to the tally.
The deal provides other benefits along with the cash, a company official said.
"As a Spanish company, our stock has been held very largely in Spain," Catherine Moukheibir, head of capital market strategy at Zeltia, told BioWorld International. "We felt the time was right for us to go back to the market and see if we could diversify the shareholder base."
The company accomplished that goal with plenty to spare. U.S. and UK investors subscribed for about 90 percent of the available stock. "Those investors on the whole tend to be more sophisticated sector investors," Moukheibir said. "It's important to have the support of fund managers who understand how the stock works."
PharmaMar is approaching a key milestone in its development. A second regulatory filing for Yondelis in soft-tissue sarcoma is expected later this year. A filing is expected in December, while approval and launch are planned in both the U.S. and Europe in 2006, Moukheibir said.
Johnson & Johnson, of New Brunswick, N.J., would market the drug in the U.S. An application previously was rejected by the London-based European Medicines Agency because of a range of factors, including the absence of control data in the original registration dossier. Those concerns have been addressed in a Phase III trial, which J&J is conducting, Moukheibir said.
Zeltia Group now has about €120 million in cash and equivalents on its balance sheet. PharmaMar, the cash-burning part of the group, will spend about €40 million on R&D this year and €50 million next year, Moukheibir said. In total, PharmaMar has five compounds in clinical development, for a range of cancer indications. While not ruling out a possible acquisition, the company would be interested only in buying an approved product. "If we did an acquisition, it would have to be cash-generative. We're not in the business of buying more pipeline," Moukheibir said.