BioWorld International Correspondent
Cytos Biotechnology AG raised gross proceeds of CHF30 million (US$23.5 million) from a placement of 750,000 shares with new and existing investors.
The share issue was priced at CHF40 per share, a substantial discount to the company's closing price of CHF52 on March 12, immediately before it disclosed the fund-raising plans.
"The market reception was very good. Unfortunately, the political environment was not so good," Jakob Schlapbach, chief financial officer of Schlieren, Switzerland-based Cytos, told BioWorld International. The company's share price softened during the final days of the book-building period because of political uncertainty fostered by recent events in the Middle East, he said.
The company initially planned to offer up to 945,770 shares and could have placed that number, Schlapbach said, but was advised by Deutsche Bank Group - which acted as global coordinator and bookrunner for the transaction - to revise that figure in light of the downward turn in the market. Deutsche Bank has been granted an overallotment option on up to 100,000 shares.
Cytos plans to use proceeds to fund further development of its pipeline of Immunodrugs, which are designed to ameliorate or prevent a range of chronic diseases. They consist of virus-like particles that contain, in highly repetitive arrays, epitopes derived from relevant disease-associated targets. Depending on the design of the individual particle, they elicit a strong antibody or T-cell response when presented to the immune system.
Cytos' lead program, the development of Immunodrug Qbeta to combat nicotine addiction, is undergoing a Phase II trial involving 300 smokers. The results, Schlapbach said, are due in the second half of 2005. Five other programs, which include efforts to combat hypertension, rheumatoid arthritis, allergy, obesity and cancer, are still in preclinical development and are due to enter the clinic over the next 12 to 18 months, Schlapbach said. The company also expects Basel-based Novartis AG to begin clinical trials of an Immunodrug for treating Alzheimer's disease this year.
Cytos began the year with CHF68.8 million in cash, cash equivalents and "cashable assets," which include real estate holdings worth around CHF20 million that it gained when it merged with the listed shell company Asklia Holding AG, of Bern, Switzerland. The company realized CHF2.6 million from the sale of part of that property portfolio in February, Schlapbach said, and it plans to dispose of the remainder over the next 12 to 18 months. Based on current spending, the company is funded for the next three years. It has forecast expenditure of less than CHF30 million this year, based on monthly cash burn between CHF2.5 million and CHF2.8 million and annual revenue in the range of CHF4 million to CHF8 million, exclusive of any new agreements.