Celgene Corp. priced an offering of 20 million shares at $51.60 per share, bringing in more than $1 billion and boosting volume to meet index fund demands associated with the stock's addition to Standard and Poor's S&P 500 Index.
Standard & Poor's announced early last week that Celgene would replace AmSouth Bancorp on the coveted index after the close of trading on Nov. 3. The news drove an immediate spike in volume: About 12.5 million Celgene shares (NASDAQ:CELG) shares traded Tuesday, when the stock closed up $1.34 at $53.44. On Wednesday, the Summit, N.J.- based company announced plans to issue 20 million shares to meet additional demand expected from index funds. The stock closed Friday at $51.65 on 15.9 million shares, a record high for volume this year.
Celgene also will be added to the S&P 500 GICS Biotechnology Sub-Industry index. As of Nov. 3, biotechnology companies accounted for just more than 1 percent of the total S&P 500. Health care stocks make up about 12.4 percent, but more than half are pharmaceutical companies, with managed care and health care equipment stocks also holding significant positions.
Celgene executives did not return calls seeking comment, but the company's prospectus states that proceeds from the financing will be used for general corporate purposes, including development of clinical and preclinical programs, expansion of international operations, capital expenditures, repayment of indebtedness, working capital and, potentially, acquisitions.
With $872.5 million in cash already on hand as of the end of the third quarter, Celgene isn't exactly starved for funding. Product revenues are bringing in even more money, with $244.8 million reported in the third quarter, an increase of 89.1 percent over the third quarter of last year and well above analyst estimates of $228.5 million. Net income for the quarter was $20.4 million, or 5 cents per share.
Third-quarter performance was driven primarily by sales of Thalomid, which pulled in $108.4 million, and Revlimid, with $101.3 million.
Thalomid, the trade name for the immunostimulatory compound thalidomide, was first approved in 1998 for erythema nodosum leprosum, an inflammatory complication of leprosy. In May 2006, Celgene gained a second FDA approval for the drug in multiple myeloma. Due to the risk of birth defects and other side effects, Thalomid is marketed under a restricted distribution program.
Revlimid, an analogue of thalidomide that also is carefully marketed, initially was approved in December 2005 for patients with transfusion-dependent anemia due to certain kinds of myelodysplastic syndromes. The drug received a second approval this year for multiple myeloma, and the company has plans to expand both indications into worldwide markets.
Additionally, Phase II and Phase III programs are under way to evaluate Revlimid in chronic lymphocyte leukemia, non-Hodgkin's lymphoma, myelofibrosis and other blood cancers. (See BioWorld Today, Dec. 29, 2005, and July 5, 2006.)
Celgene also markets Alkeran for multiple myeloma and ovarian cancer as well as Focalin and Ritalin for attention deficit disorder and attention deficit hyperactivity disorder with partner Novartis Pharmaceuticals Corp., the U.S. subsidiary of Novartis AG, of Basel, Switzerland. The company has a clinical pipeline full of immunomodulatory and anti-inflammatory compounds, as well as kinase- and ligase-inhibitor programs and a placental-derived stem cell program in development.
Celgene's stock closed at $52.67 on Monday, up $1.02.
In other financing news:
• Ondine Biopharma Corp., of Vancouver, British Columbia, filed to raise C$10 million (US$8.9 million) through the sale of 6.25 million shares at C$1.60 (US$1.42) per share. Canaccord Capital Corp. will lead the offering, with Desjardins Securities Inc. and Pacific International Securities Inc. also serving as underwriters. Proceeds will be used for the marketing and commercialization of Periowave, a light-activated, non-antibiotic treatment for chronic periodontitis in adults, as well as for other purposes.
• Neurochem Inc., of Laval, Quebec, raised $40 million through a private placement of 6 percent convertible notes due in 2026. The notes carry a conversion premium of 20 percent. The buyer, a U.S.-based registered broker-dealer, has an option to purchase an additional $2.09 million worth of notes. Proceeds will be used for general corporate purposes, including the advancement of clinical development for programs such as eprodisate, which is under FDA and EMEA review for AA amyloidosis, and tramiprosate, which is in Phase III trials for Alzheimer's disease and Phase IIa trials for the prevention of hemorrhagic stroke caused by cerebral amyloid angiopathy.
• SR Pharma plc, of London, raised £3.8 million (US$7.2 million) through the sale of 20 million shares at 19 pence (US$36 cents) per share to fund development programs and provide working capital. Subsidiaries of SR Pharma include Berlin-based Atugen AG, which specializes in RNAi therapeutics, and London-based Stanford Rook Ltd., which is seeking to license its clinical-stage Mycobacterium vaccae-based technology and related products for asthma, cancer and tuberculosis.