A Medical Device Daily
ViaCell (Boston) late last week unveiled the pricing of its latest effort at an initial public offering (IPO), selling 7.5 million shares of its common stock at $7 a share and making it the first biotech firm to test the IPO waters in 2005. Gross proceeds would be $52.5 million.
The pricing is much scaled-down from previous IPO plans by the company. ViaCell in early 2002 filed with the Securities and Exchange Commission for an IPO of $115 million and then withdrew it in December of 2003, citing weakness in the market.
The company again made an SEC filing for an IPO of up to $92 million in April 2004.
In the current IPO effort, all of the shares are being offered by ViaCell. In addition, the company has granted to the underwriters a 30-day option to purchase up to an additional 1,125,000 shares of common stock to cover any over-allotments. ViaCell's common stock began trading on the Nasdaq market on Friday under the symbol VIAC.
While the company describes itself as a “clinical stage“ biotechnology firm, it is somewhat different than similar biotech companies that have taken the IPO path of late in that it already has a product on the market and a second potentially rolling out this year.
ViaCell generates revenues — nearly $31 million in 2003 — from its Viacord product, a system offering expecting families the option of collecting and preserving their babies' cord blood stem cells. Preserved umbilical cord blood is being considered increasingly important in treating pediatric cancer patients requiring bone marrow transplants, with that market potentially comprising 25% of all U.S. births.
In addition, the company is awaiting FDA approval for a new product, Viacyte, used to preserve and store human eggs, potentially an important way to extend fertility.
ViaCell also is developing a stem cell-based alternative to bone marrow transplants intended to be more effective, have fewer side effects and provide faster patient recovery. The product, CB001, is a concentrated and purified population of stem cells used as a substitute for bone marrow and other transplants, in collaboration with Amgen (Thousand Oaks, California).
ViaCell recently commenced enrollment of a Phase I clinical trial for CB001 in 10 patients and plans to complete patient follow-up by mid-2005. If the data look promising, CB001 will be moved into Phase II, the company said. Analysts indicate, however, that this is a more distant opportunity, not expected to reach commercialization for another three to four years and likely to require additional financing.
The company in general is addressing technologies to treat cancer, cardiac diseases and infertility. ViaCell's portfolio of technologies includes Selective Amplification technology and USSC.
CS First Boston is the lead underwriter for the $60 million offering and is being assisted by UBS Warburg, Lazard and Leerink Swann & Co.
Besides its relationship with Amgen, ViaCell has a partnership with Genzyme (Cambridge, Massachusetts) to create a hematopoietic stem cell transplant product. Those firms, together, have invested $25 million in ViaCell. GlaxoSmithKline (London) also is an equity holder in ViaCell.
The company was incorporated in 1994 under the name t. Breeders, but changed its name to ViaCell in April 2000 after acquiring Viacord, a private umbilical cord blood-banking business. Since its inception, the company has lost more than $128 million.
ViaCell and three other companies in the cord stem cell sector are embroiled in patent litigation with PharmaStem Therapeuics (Larchmont, New York). ViaCell is currently appealing a ruling against it in the case (Medical Device Daily, Dec. 22, 2004) and has said that failure to do so could result in the loss of revenue or the requirement to pay out royalties.
In other financing activity:
• Constella Group (Durham, North Carolina), which bills itself as a “human health professional services company,“ reported securing its first-ever institutional equity financing — totaling $61 million — since its founding in 1983.
Leading the investment was Wachovia Capital Partners, with Wakefield Group also participating.
Constella said it would use the new equity along with debt capital to expand services to its public- and private-sector clients and to grow its market presence across the healthcare value chain through acquisitions within the U.S. and abroad.
Donald Holzworth, Constella chairman and CEO and a founder and majority owner of the company, said, “We plan to use this growth capital to substantially expand our impact on human health around the world every day.“
Constella also reported acquiring Futures Group (Washington), effective Jan. 12, a provider of public health programs for developing countries.
Futures Group focuses on key areas such as HIV/AIDS, TB and malaria, maternal and child health, and family planning and reproductive health. Its staff of more than 400 provides services and solutions in more than 55 countries, including public health policy development and implementation, social marketing and technical assistance.
Futures Group will maintain its name and operate as a business unit of Constella. Its former CEO, Robert Smith, will remain at that firm's helm as president.
Among Futures Group's primary clients are the USAID, the UK Department for International Development (DFID), as well as United Nations agencies such as the World Health Organization and UNICEF.
Constella's primary clients are the Centers for Disease Control and Prevention (Atlanta), the National Institutes of Health (NIH; Bethesda, Maryland), and the U.S. Army Medical Research and Materiel Command. Constella also provides clinical trials and informatics services to the biopharmaceutical industry.
• Gen-Probe (San Diego) reported that bioMerieux (Durham, North Carolina) has exercised an option to develop diagnostic products for certain disease targets using Gen-Probe's patented ribosomal RNA technologies, in accordance with an agreement disclosed last October (MDD, Oct. 8, 2004).
bioMerieux has paid Gen-Probe a $4.5 million license fee, and it will retain options to develop diagnostics for other disease targets by paying Gen-Probe up to an additional $3 million by the end of 2006.
Gen-Probe will record $1.9 million of the $4.5 million payment as license revenue in 1Q05. The amount and timing of additional revenue that Gen-Probe records will depend on the number of additional targets, if any, selected by bioMerieux, Gen-Probe said. Gen-Probe also will receive royalties on the sale of products developed using the company's intellectual property.
As previously disclosed, Gen-Probe expects license fees from bioMerieux to comprise more than half of its total 2005 royalty and license revenue of between $6 million and $7 million.
Gen-Probe is a maker of rapid, accurate and cost-effective nucleic acid tests for diagnosing human diseases and screening donated human blood.
The company's Tigris instrument is the only fully automated, high-throughput system in the molecular diagnostics industry.
bioMerieux is a clinical diagnostics firm.