BioWorld International Correspondent

PARIS - Days after announcing that it was to receive an initial milestone payment of €10 million from the Basel, Switzerland-based pharmaceutical company F. Hoffmann-La Roche Ltd., before the end of June, and two months after an up-front payment of €13 million, Transgene SA announced the launch of a €75.7 million (US$101.1 million) capital increase to accelerate the development of its product pipeline and upgrade its manufacturing capabilities.

The Strasbourg, France-based company said the purpose of the capital increase is to enable it to finance the growing financial demands of its business; including current and future clinical trials of product candidates; the development of new products emanating from its research programs; and investments in its production facilities to ready them for the commercial supply of clinical batches of the therapeutic vaccine it is co-developing with Roche. The announcement of the capital increase triggered an immediate 5.6 percent jump in Transgene's share price to €18.75 June 11.

That product, TG 4001/R3484, is a vaccine against human papilloma virus-mediated diseases, and is the leading candidate in Transgene's portfolio of therapeutic vaccines for treating cancer and infectious diseases. They also include therapies for non-small-cell lung cancer, cutaneous B cell lymphoma and chronic hepatitis C.

The capital increase is taking the form of a public offering of 4.15 million new shares at a subscription price of €18.25 per share. The offering opened June 11 and will close June 14, although institutional bookbuilding may close before that. Existing shareholders were given priority during the first three days, when they were permitted to subscribe one new share for four existing shares. Settlement, delivery and admission to trading of the new shares are scheduled for June 20.

Depending on demand, an extension option of 611,114 shares, corresponding to 15 percent of the initial number of new shares, could be granted, which would increase the value of the capital increase to €87 million. A decision on that will be taken by June 14 at the latest.

In addition, the lead manager and bookrunner, Bryan Garnier & Co., of Paris, is being offered an overallotment option of 715,431 additional shares, corresponding to 15 percent of the initial and extension number of shares. That option is to be exercised no later than July 13. If both this option and the extension option are exercised, the gross proceeds of the capital increase would amount to about €100 million and the net proceeds to €96.8 million.

On the basis of Transgene's share capital as of May 31, the new shares (excluding the exercise of the extension and overallotment options) represent 25 percent of the company's share capital and 17.5 percent of the voting rights.

Transgene's controlling shareholder, TSGH, part of the Paris-based Merieux-Alliance group, which holds 52.4 percent of the existing shares, has informed the company that it intends to take up 55 percent of the capital increase. It has undertaken not to offer, sell or issue shares or any other securities that could give rights to Transgene's share capital for a period of 270 days following the signing of the underwriting agreement.

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