Genset SA entered a financing agreement under which SG Cowen will purchase up to EUR50 million (US$$43.8 million) of Genset stock over two years.
The timing and amount of each purchase will be determined by Paris-based Genset, which said it could issue up to EUR30 million of stock in the first year.
The share price will be determined by a 10-day trading reference period. Genset chooses the reference period and can require SG Cowen to purchase up to 16 percent of its trading volume for each period. SG Cowen will pay 92 percent of the average weighted price of the shares on the Nouveau Marche for that particular period.
SG Cowen can hold or sell the shares as it pleases.
Genset said it will sell a minimum of EUR15 million of its shares over the two-year period. Assuming shareholder approval and satisfaction of certain regulatory conditions, Genset said it should be in position to use the equity line in two to three months.
Separately, Genset said it no longer plans to sell its oligonucleotides business, saying the offers it received under the current market conditions did not satisfy its strategic or financial requirements for the deal.
John Varian, chief financial officer at Genset, said, ¿We are very happy to have been able to put in place such an innovative arrangement in France with SG Cowen, which knows Genset and the market very well. It will provide the cash we will need to complete the conversion of Genset into a drug development company without forcing us to sell a substantial amount of stock at today¿s depressed price, or to sell the oligonucleotides division for less than it is worth.¿
The company this week also named John Ford as vice president of biopharmaceuticals. He will head Genset¿s San Diego operations, with responsibility for the company¿s functional genomics efforts in metabolic diseases. He also will be responsible for Genset¿s worldwide effort to capitalize its secreted protein library.
Ford formerly was vice president, functional genomics, at Hyseq Inc., of Sunnyvale, Calif.
And finally, Genset said it achieved a major step in the development of its first potential therapeutic, Famoxin. The company said it produced in E. coli the fragment of the human protein it plans to take into clinical trials. A paper in the Jan. 9, 2001, issue of the Proceedings of the National Academy of Sciences described the mouse Famoxin protein¿s ability to cause sustainable weight loss.