West Coast Editor
Barely two months into the year, SangStat Medical Corp. priced its public offering of 4.5 million shares at $17.25 each, making a haul of more than $77.6 and exceeding the total raised in all of 2001 when the company had vowed to achieve its “break-even point” in the fourth quarter.
“This enables us to pay off a high-interest loan and gives us a cash reserve we never had before,” said Stephen Dance, senior vice president of finance for Fremont, Calif.-based SangStat, noting that the firm hit its target of becoming profitable by the end of 2001.
“We’d always planned to do a follow-on offering at some point, and we thought with the run-up in our stock price this year, now was a good time to do it,” he added.
From the proceeds, $16 million will be used to pay off the three-year-old loan, which carries an 8.75 percent interest rate, Dance told BioWorld Today.
“We’ll be saving a substantial amount of interest,” he said, and the loan was one of the main reasons for the offering. “It was that, and cleaning up our balance sheet,” he said. After the offering and before any payments are made, SangStat will have $100 million in cash, Dance said.
Underwriters, which have a 30-day option on up to 675,000 more shares in overallotments, are Merrill Lynch & Co., of New York; J.P. Morgan, of New York; Thomas Weisel Partners LLC, of San Francisco; and Wells Fargo Securities LLC, of San Francisco.
Proceeds also will go toward general corporate purposes, including in-licensing and partnering opportunities, the company said.
In the summer of last year, SangStat grossed $15 million in a private placement, which followed a placement of $12.5 million at the start of 2001. (See BioWorld Today, June 25, 2001, and Jan. 10, 2001.)
Focused on transplants with work under way in immunosuppression, hematology/oncology and immunology, the company markets the antithymocyte rabbit immunoglobulin Thymoglobulin, approved in 1998 for treatment of renal transplant acute rejection in conjunction with concomitant immunosuppression; Gengraf cyclosporine capsules for prophylaxis of organ rejection in kidney, liver and heart allogeneic transplants; Celsior, launched in the U.S. in 1999 as a flush and cold storage solution for cardiac transplantation; and Lymphoglobuline, sold outside the U.S. for treatment of aplastic anemia and graft-vs.-host disease.
In development is ABX-CBL, an anti-CD147 monoclonal antibody for treatment of steroid-resistant graft-vs.-host disease, partnered with Abgenix Inc., of Foster City, Calif.
“That’s in a Phase II/III trial that we expect to complete by the end of this year,” Dance said, with 77 patients enrolled now, of an expected 92.
Also in the pipeline: RDP58, a Phase I candidate for treatment of inflammatory bowl disease.
“It’s in Phase II clinical trials in the UK, and we expect to have data toward the end of the year,” Dance said. “RDP58 is the product we’re most excited about. [Inflammatory bowel disease] is a large market in the U.S., and this appears to have application in other diseases as well. Also, it’s one we developed ourselves.”
Moving along are bioequivalence trials on cyclosporine capsules to prevent organ rejection.
“We plan on filing [for approval] probably in late 2002,” Dance said.
SangStat’s stock (NASDAQ:SANG) closed Tuesday at $18.01, up 41 cents.