By Matthew Willett
InterMune Inc. priced its public offering of 3.75 million shares at $32 per share for proceeds of $120 million, and added $130 million to the financing through the sale of 5.75 percent convertible subordinated notes.
The stock offering, proposed in early June, includes a 545,896-share overallotment option for lead managing underwriter Lehman Brothers Inc., of New York, and co-managing underwriters Banc of America Securities LLC, of New York; Robertson Stephens Inc., of San Francisco; and UBS Warburg LLC, of Stamford, Conn.
The notes, due 2006, are convertible into InterMune common stock at a rate of about 26 shares per $1,000 principal amount, or $38.40 per share.
InterMune, of Burlingame, Calif., had cash, cash equivalents and marketable securities of about $175 million as of March 31. It had approximately 24 million shares outstanding and posted a net loss for the first quarter of about $10.6 million.
After the offering InterMune has about 28 million shares outstanding and about $375 million in cash and marketable securities. Its lead product is Actimmune (interferon gamma 1-b) for the treatment of chronic granulomatous disease and severe, malignant osteopetrosis.
Officials at InterMune said the funding will support an expansion in the clinical program for Actimmune designed to expand the drug¿s indications to include use in combination with other anticancer therapies. CEO Scott Harkonen told BioWorld Today the program will seek to exploit Actimmune¿s efficacy in combination with platinum-based therapeutics.
¿I think we have an emerging opportunity with Actimmune to develop it as a combination therapy with other anticancer agents in the field of oncology,¿ Harkonen said. ¿There¿s growing evidence that Actimmune works in a complementary or synergistic fashion with cisplatin or other platinum-based therapeutics and with 5-FU, so we¿ll use the proceeds to fund clinical trials in combination with cancer therapeutics.¿
Harkonen said InterMune plans to initiate in the fourth quarter a large Phase III trial of Actimmune in combination with platinum-based therapy and Taxol for first-line treatment of ovarian cancer, and a Phase II trial of Actimmune and Rituxin vs. Rituxin alone in patients with non-Hodgkin¿s lymphoma.
Actimmune currently is in Phase III trials for idiopathic pulmonary fibrosis and tuberculosis.
In March, InterMune entered an alliance with Boehringer Ingelheim GmbH, of Ingelheim, Germany, giving Boehringer worldwide marketing rights to Actimmune outside the United States, Canada and Japan, areas InterMune retains today. The alliance calls for a royalty rate to InterMune of about 20 percent under particular sales conditions, and InterMune may continue development for idiopathic pulmonary fibrosis. (See BioWorld Today, March 27, 2001.)
InterMune¿s second product, Amphotec, is marketed worldwide for the treatment of invasive aspergillosis. InterMune bought Amphotec from ALZA Corp., of Mountain View, Calif., in January for a $9 million up-front license fee, milestone payments and royalties. Amphotec brought in $613,000 for InterMune in the first quarter. (Actimmune sales were $4.9 million for the quarter.)
InterMune Chief Financial Officer Tim Lynch said the convertible notes offering was tacked on due to a demand that oversubscribed the equity offering by five times. InterMune added 750,000 shares to the equity offering since its disclosure in June. (See BioWorld Today, June 6, 2001.)
¿Our goal was to complete a significant financing, and our strategy was to access both groups of investors,¿ Lynch told BioWorld Today. ¿There¿s been significant demand among convertible notes buyers for life sciences companies in the past two months, and we wanted to take advantage of that, and we also wanted to issue equity because we felt the demand was there and we wanted to increase our float.¿
The notes¿ conversion price represented a 20 percent premium to the share price at the close of trading Thursday. The equity offering was priced in line with the share price.
Lynch said the offering also could fund acquisitions of products. ¿I think we¿re more focused on in-licensing products, both Phase I and pre-Phase I and, potentially, another marketed product in the oncology area,¿ he said.
InterMune¿s stock (NASDAQ:ITMN) closed Friday at $35.62, up $3.64, or 11.4 percent.