Like two of its predecessors, Corgentech Inc. watched its stock climb Thursday - the day of its initial public offering.
The South San Francisco-based company sold 6 million shares at $16 each, raising $96 million; it now trades on the Nasdaq National Market under the symbol "CGTK." While the IPO priced at the high end of the company's expected range - $14 to $16 - it still had an impressive debut. Its stock closed Thursday at $21.40, up $5.40, or a 33.8 percent jump.
It is the fourth biotech IPO this year, behind Eyetech Pharmaceuticals Inc., of New York; GTx Inc., of Memphis, Tenn.; and Renovis Inc., of South San Francisco. Eyetech and Renovis both are trading above their IPO price.
Corgentech, which remains in an SEC-imposed quiet period, expects to receive $87.6 million in net proceeds, or $101 million if the overallotment option is exercised in full. According to its prospectus, about $49 million will be used to complete two Phase III trials and post-approval trials for its lead product candidate, E2F Decoy. The balance will be used to continue development of other candidates, to prepare for the commercial launch of E2F Decoy, and for working capital and general corporate purposes.
Credit Suisse First Boston and Lehman Bros. Inc., both of New York, are the co-lead managers for the IPO. CIBC World Markets, of New York, and U.S. Bancorp Piper Jaffray, of Minneapolis, are co-managers. The underwriters have an overallotment option for an additional 900,000 shares.
Corgentech focuses on a new class of therapeutics called transcription factor (TF) decoys to find treatments for cardiovascular disease, inflammatory disease and cancer. TF decoys are short strands of DNA that bind to and block the activity of their target transcription factors.
E2F Decoy inactivates the E2F transcription factor, which is responsible for turning on several genes responsible for the proliferation of smooth-muscle cells that can lead to arterial blockage and failure of bypass vein grafts. E2F Decoy is administered to the veins using a pressure delivery device.
The product is in Phase III trials for the prevention of vein-graft failure. Corgentech completed patient enrollment in both of the trials in September. It also expects to begin a Phase I/II trial of E2F Decoy in the first half of this year for the prevention of arteria-venous (AV) graft failure. The FDA granted the product fast-track designation in both indications.
Corgentech has a worldwide agreement with Bristol-Myers Squibb Co., of New York, to develop and commercialize E2F Decoy for all indications. The deal, which was signed in October, was worth $45 million up front for Corgentech. The company also could receive $205 million in regulatory milestone payments and another $320 million in sales milestone payments. Corgentech has the right to co-promote E2F Decoy in the U.S., sharing equally the profits with Bristol-Myers. Bristol-Myers has the exclusive right to commercialize the product outside the U.S., paying royalties to Corgentech. (See BioWorld Today, Oct. 14, 2003.)
While coronary artery bypass graft (CABG) and peripheral artery bypass graft (PBG) surgeries are effective procedures, the company said in its prospectus that they often fail due to abnormal cell growth that results in a narrowing of the vein.
Of the two Phase III trials with E2F Decoy, one enrolled 2,400 patients undergoing CABG surgery, while the other enrolled 1,400 patients undergoing PBG surgery. The company expects data from the PBG trial in the fourth quarter, and the results from the CABG trial in the first quarter of 2005.
In a Phase II trial in CABG patients, the company observed a statistically significant reduction of blockage - 75 percent or greater - in E2F Decoy-treated patients 12 months after treatment. A Phase I/II trial in PBG patients showed that the therapy was safe and resulted in significant inhibition of the E2F-controlled genes. Both trials showed no adverse events.
The company has additional TF decoys in preclinical development to treat inflammatory diseases and cancer.
Corgentech filed for the IPO in December, hoping to raise $86.25 million. (See BioWorld Today, Dec. 8, 2003.)
With the completion of the IPO, it has 26.1 million shares outstanding.