BioWorld International Correspondent

PARIS - Innogenetics NV plans to raise about €39 million through a public share offering that is due to be launched today and close Dec. 9.

It is issuing about 2.54 million shares at €14.10 per share, plus an overallotment option on another 253,797 shares. The total of 2.79 million shares is about 11 percent of its existing equity.

The public offering is being confined to Belgium, but part of the new shares are being placed privately with institutions there and in other European countries. Some 1.1 million of the shares will be offered to existing shareholders in a proportion of one for 25 existing shares.

The company said the additional funding is required to finance its ongoing research and development activities to 2006, when it expects to achieve overall break-even.

Based in Ghent, Belgium, Innogenetics was founded in 1985 and went public in 1996 with an IPO on the Nasdaq Europe stock exchange. In December 2002, it obtained a listing on the Euronext Brussels exchange, and then voluntarily delisted from Nasdaq Europe in July.

The company is engaged in both the production of specialty diagnostics and the development of novel therapeutics, but while the diagnostics business now generates a modest profit, that is dwarfed by the €19 million a year the company invests in therapeutics R&D.

Innogenetics had an operating loss of €16 million in 2002; although it intended to reduce that in 2003, it reported a loss of €14.2 million for the first nine months of this year. However, the full-year outcome could be bolstered by a milestone payment expected in the fourth quarter.

The company had cash of €24 million on Sept. 30 and a market capitalization of about €340 million.

Innogenetics' business strategy is to apply the immunology and molecular biology know-how it has gained from its diagnostics business to the development of therapeutic vaccines. Its diagnostics products mainly consist of screening, confirmation and genotyping tests for infectious diseases (HIV, hepatitis B and C), genetic tests (cystic fibrosis, HLA typing) and tests for neurodegenerative diseases (Alzheimer's), while in therapeutics it is focusing on vaccines for infectious diseases (hepatitis C), wound care (leg ulcers) and immune disorders (edema and sepsis).

The company already exploits its intellectual property through technology partnerships and licensing deals, and royalties and license fees provide about one-quarter of its revenues. That proportion could rise to 33 percent in the coming years, CEO Philippe Archinard said.

Innogenetics' lead therapeutics product is a vaccine for hepatitis C. The vaccine yielded "highly encouraging" results in a Phase IIa trial completed last spring, and an extension study is under way to evaluate long-term benefits. In addition, a Phase IIb study of 150 chronic hepatitis C patients started in several centers around Europe at the end of 2002 and will be completed by the end of 2004.

Innogenetics also is developing a prophylactic vaccine for hepatitis C, which is at the preclinical stage. Its strategy is to partner out prophylactic vaccines at an early stage.

The other product spawned by Innogenetics' in-house therapeutics program is LyphoDerm, a treatment for chronic leg ulcers derived from freeze-dried cultured human keratinocytes. It is being developed by its wound care subsidiary, XCellentis, which was spun off in early 2001 and recently unveiled positive preliminary results from an ongoing Phase II trial. Final results are expected in January, and the company aims to have the product on the market by 2006.

Innogenetics also has two products in the pipeline to counter the immune disorders of pulmonary edema and sepsis. INNO 201 is a peptide that has demonstrated an ability to absorb accumulated fluid in the lungs, and INNO 202 is a humanized anti-interferon-gamma monoclonal antibody that yielded positive results in animal studies of sepsis.

Innogenetics employs about 600 people, 450 of whom are based in Belgium and 80 of whom are engaged in therapeutics research and development.