Cubist Pharmaceuticals Inc. and ZymoGenetics Inc. each raked in more than $70 million through follow-on public offerings that priced before the market opened Thursday.
Lexington, Mass.-based Cubist raised about $78.3 million after selling about 7.5 million common shares at $10.50 apiece in an oversubscribed offering. The company, which originally planned to sell 5.6 million shares, sold the stock pursuant to a shelf registration worth $75 million that was expanded by 20 percent given the high demand. On Thursday, its shares (NASDAQ:CBST) gained 32 cents to close at $10.97.
"We wanted to be in a position of financial strength to effect the best Cubicin launch as possible," Jennifer LaVin, Cubist's executive director of corporate communications, told BioWorld Today, "and also be in a better position to advance our pipeline."
Cubist granted a 30-day overallotment option to the underwriters for up to about 1.1 million additional shares. The offering's sole book runner is Morgan Stanley & Co. Inc., of New York. Pacific Growth Equities LLC, of San Francisco, is a co-lead manager, and other co-managers include WR Hambrecht + Co. LLC, also of San Francisco, and Harris Nesbitt Gerard Inc., also of New York.
At the end of its most recently reported quarter, Cubist had 29.7 million shares outstanding as well as reserves of $103 million in cash and investments. Over the three-month period ended June 30, the company lost $24.3 million.
"Our balance sheet is a little bit upside down, with about $200 million in debt," LaVin said. "We have guided The Street that our burn rate would be between $100 million and $110 million, so we filed the shelf to be in a better position to raise funds."
Cubist plans to apply a portion of the latest funds toward its Cubicin launch efforts, which are scheduled to begin in November. The skin infection drug received FDA approval last month to treat infections caused by Gram-positive bacteria. LaVin said an internally built, 75-person sales force would market the drug in the U.S. (See BioWorld Today, Sept. 16, 2003.)
Outside the U.S., a recent Cubicin pact signed with Chiron Corp. could bring Cubist $50 million in up-front payments and potential milestones, as well as double-digit royalties. Emeryville, Calif.-based Chiron gained development and marketing rights for Cubicin in Europe, Australia, New Zealand, India and certain Central American, South American and Middle Eastern countries. (See BioWorld Today, Oct. 6, 2003.)
Cubist also plans to use the money to advance a pair of pipeline candidates. CAB-1975, a cephalosporin antibiotic, has moved into Phase I studies and is expected to advance into Phase II next year.
"It has the spectrum of coverage of current third-generation cephalosporins, but adds to that methicillin-resistant Staphylococcus aureus," LaVin said. "We think it will have a solid place in the market, particularly in light of the increasing incidence of community-acquired MRSA."
Cubist is developing a preclinical compound, OCTX, an oral version of an intravenous antibiotic called ceftriaxone (Rocephin, from F. Hoffmann-La Roche Ltd.).
ZymoGenetics' Public Offering Raises $75 Million
Seattle-based ZymoGenetics grossed $75 million, selling 6 million shares at $12.50 apiece. On Thursday, its shares (NASDAQ:ZGEN) fell 11 cents to close at $12.58.
The company sold the stock through a shelf registration filed in July for $150 million. ZymoGenetics reported $253 million in cash and investment reserves as of June 30.
"As is ever the case, the time to raise money is when you don't need it," ZymoGenetics' president and CEO Bruce Carter told BioWorld Today. "At the same time, we would like to make sure that we can have enough in our war chest [so] we can get Thrombin and Factor XIII on the market. We also have a drug called TACI-Ig, and it looks really interesting in lupus, as well as rheumatoid arthritis and multiple sclerosis. We want the money to explore all three of those possibilities."
ZymoGenetics granted its underwriters a 900,000-share overallotment option. The offering's joint book-running managers include Merrill Lynch & Co. and Bear, Stearns & Co. Inc., both of New York. Co-managers include Pacific Growth Equities and U.S. Bancorp Piper Jaffray Inc., of New York.
At the end of its most recently reported quarter, ZymoGenetics had 46 million shares outstanding and posted a $13.4 million net loss for the period.
ZymoGenetics plans to use the funds to supplement its ongoing research and development exercises, including manufacturing plans for its blood-clotting products, rhThrombin and rFactor XIII.
"The only thrombin on sale in this country is bovine thrombin, and we think the market would appreciate human recombinant thrombin," Carter said. "We recently signed an agreement with Abbott and have to quickly begin commercial manufacturing because this will be on the market by 2006."
Early this month, ZymoGenetics began a commercial manufacturing agreement with Abbott Park, Ill.-based Abbott Laboratories, which will produce rhThrombin for ZymoGenetics' late-stage clinical studies and commercial sale. ZymoGenetics retains all commercial rights to the product, which it expects to move into the clinic by the end of this year.
Carter added that the company is pushing to launch human recombinant Factor XIII in 2006 as well, in hemophiliac patients with genetic deficiencies of the enzyme who will bleed without treatment. The program is in Phase I work.
Last month, in collaboration with Geneva-based Serono SA, ZymoGenetics began a Phase I trial of TACI-Ig in healthy volunteers. The soluble receptor is being developed by the companies for autoimmune diseases such as rheumatoid arthritis and multiple sclerosis, which Carter said is predominantly a B-cell disease rather than a T-cell disease as previously thought.
He added that recent FDA guidance on lupus would help focus clinical investigators working toward a therapy - direction that could help guide further development of TACI-Ig in that indication.
"In the mid 90s, when we turned to genomics, we first focused on protein therapeutics and the way we do it is different from everybody else," Carter said. "We're finding a lot of really novel, patent-protected proteins that need to be tested in the clinic. And we think we have that rare thing - a genomics strategy that's working."