BioWorld International Correspondent

Biovitrum AB provided its investors with a partial exit but raised no new cash in an initial public offering on the Stockholm Stock Exchange that values the company at around SEK5 billion (US$690 million).

The Stockholm, Sweden-based company's existing shareholders offered 6.7 million shares, priced at SEK100 per share, above the mid-point of a previously published indicative range of SEK90 to SEK105. Trading commenced Friday under the stock symbol BVT, and the shares peaked at SEK114 before closing at SEK111.50. The stock climbed to a high of SEK116 Monday, but fell back to close at SEK113.50.

"There are technical factors behind the share price rise on Friday and on Monday, as well," Mattias H ggblom, analyst at ABN Amro Securities in Stockholm, told BioWorld International. Fund managers following particular indices need to acquire stock in order to re-balance their portfolios, he said.

Moreover, the stock is in relatively short supply. The 6.7 million shares sold in the IPO represent about 15 percent of the company's equity, although the selling shareholders also are making available 1 million shares to cover overallotments. "The surprise, maybe, was that the free float is not going to be more than 15 percent to 20 percent or so," H ggblom said.

The company's failure to seek additional funds raised less eyebrows. "The reason we did not raise cash is we have SEK1.2 billion in cash or cash equivalents," Anna Karin K llén, vice president, communications and investor relations at Biovitrum, told BioWorld International.

Moreover, the company is cash positive. It reported net earnings of SEK93.4 million on revenues of SEK708.1 million for the first half of 2006. Around half of its revenues are derived from the manufacture of ReFacto - a recombinant form of Factor VII - on behalf of Madison, N.J.-based Wyeth.

Under its present business plan, the company has no immediate need for additional finance. "That could, of course, change long term, if we wanted to do a major acquisition or go into Phase III with a couple of projects," K llén said.

Biovitrum's entry to the ranks of Sweden's quoted biotechnology companies will have a positive impact on investor attitudes to the sector, H ggblom said. "It's quite important for sentiment. It's been long-awaited. People have basically been expecting this since the company was formed in 2001."

Biovitrum was spun out from Pharmacia Corp., of Peapack, N.J., (now part of New York-based Pfizer Inc.) in a SEK1.5 billion investment deal led by Stockholm-based Nordic Capital and Boston-based MPM Capital. Because of its large size - it has about 500 employees and spends almost SEK600 million on R&D every year - and high visibility, it immediately became a flagship for Sweden's biotechnology sector.

While the company has a diversified revenue stream, which includes royalty income associated with ReFacto, research income, process development services on behalf of third parties and co-promotion rights to several products in the Nordic region, its proprietary pipeline is young.

"They've been quite active in broadening the pipeline, but it's still quite early stage," H ggblom said.

Its most advanced product, Exinalda, is undergoing a Phase II trial for fat malabsorption in cystic fibrosis patients with pancreatic insufficiency. Projects in inflammatory pain, diabetes and glaucoma are at the Phase I stage.

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