Leading all biotech initial public offerings conducted this year in the U.S., Coley Pharmaceutical Group Inc. topped the list with proceeds of $96 million, then raised another $10 million through a concurrent private placement with Pfizer Inc.
The Wellesley, Mass.-based company offered 6 million shares of its common stock at $16 apiece, and began trading its stock on the Nasdaq National Market under the symbol "COLY." Shares soared in early trading, climbing 18 percent, or $2.88, to end the day at $18.88.
The placement with Pfizer involved 625,000 shares purchased at $16 each under the terms of their worldwide license agreement announced in March. That deal, worth potentially $505 million, gave New York-based Pfizer worldwide rights to ProMune, a TLR9 agonist that is in Phase II trials for non-small-cell lung cancer, malignant melanoma and cutaneous T-cell lymphoma. (See BioWorld Today, March 25, 2005.)
Merrill Lynch & Co. and JPMorgan Securities Inc., both of New York, acted as co-lead underwriters for the offering, while New York-based Lazard Freres & Co. LLC and Boston-based Leerink Swann & Co. acted as co-managers. They have an overallotment option to purchase an additional 900,000 shares. If they exercise it in full, net proceeds to Coley would rise to about $111 million.
Following the IPO, Coley has about 24.8 million shares outstanding.
The buzz around Coley stems from its work in the new area of Toll-like receptors (TLRs), which has generated a lot of interest from pharmaceutical companies like Pfizer, as well as the investment community. According to BioWorld Snapshots, Boston-based ViaCell Inc. raised the second highest amount of $60.4 million when it conducted its IPO in January.
With the combined IPO and private placement, Coley came very close to reaching the $115 million mark it set out to raise when it filed for its IPO in April, unlike many other biotech companies in the last few years that have priced IPOs well below the expected ranges. (See BioWorld Today, April 21, 2005.)
Coley's management could not comment on Wednesday due to an SEC-imposed quiet period, but the company's prospectus said $97.6 million in net proceeds from both financings will fund the growth of its business and cover general corporate purposes. Specifically, about $48 million will fund the continued clinical development of the TLR9 agonist Actilon, including the expansion of ongoing Phase Ib trials in hepatitis C virus and starting multiple Phase II trials.
Coley also has earmarked $28 million of the proceeds to expand its product candidate portfolio into additional disease areas beyond cancer, infectious disease and respiratory diseases. The company plans to identify new TLR therapeutic product candidates and advance them from the preclinical stage up to the start of Phase II trials.
The remaining $22 million in proceeds will fund working capital, expenditures, prosecution and maintenance of Coley's patents, and other corporate purposes.
TLRs appear on the surfaces of antigen-presenting cells and help regulate immune responses to bacterial, viral and fungal infections. The first one was cloned in 1998. It is an emerging area of interest for several pharmaceutical companies, including Basel, Switzerland-based Novartis AG, which signed a $570 million deal in June for TLR7 oral prodrugs with Anadys Pharmaceuticals Inc., of San Diego. (See BioWorld Today, June 3, 2005.)
That same week, Novartis entered into a $136 million agreement with Cambridge, Mass.-based Hybridon Inc. to find TLR9 drug candidates for asthma and allergy. (See BioWorld Today, June 2, 2005.)