PARIS ¿ Ethypharm hopes to raise about EUR160 million (US$137 million) through the IPO it launched on the Premier Marchi of the Euronext stock exchange in Paris on Monday.

The Paris-based drug delivery company will issue a total of 10.94 million new shares, of which 300,000 will be reserved for its staff, while shareholders are also to sell 3.55 million existing shares. Of the total, 12.77 million shares are being offered to institutional investors both in France and elsewhere, 1.42 million are being offered to private investors in France, and 300,000 new shares are earmarked for Ethypharm¿s staff.

In addition, the underwriters are being offered a greenshoe of an additional 2.13 million existing shares, representing 15 percent of the issue. Altogether, a total of 16,316,470 shares could pass into public hands, representing 22.6 percent of the company¿s equity on a fully diluted basis. At present, the families of the two co-founders, chairman Patrice Debrigeas and managing director Girard Leduc, hold 50 percent each, but following the IPO their holdings will be reduced to 39.65 percent and 39.93 percent, respectively.

The price band for the offering has been set at EUR10.40 to EURO12.10 (US$8.95 to $10.40), and if a midway price were retained, the IPO would generate EUR159.6 million (excluding the shares taken up by company staff). That would value Ethypharm at around EUR800 million, nearly eight times its 2000 turnover of EUR105.4 million. Taking account of the greenshoe and the shares bought by employees, the operation would be worth close to EUR187 million (US$160 million) at the median price of EUR11.25.

The offer to French investors and company staff opened on Monday and will close on June 29, while the road show was launched on Monday and bookbuilding will be completed on July 2, when the price will be fixed and the shares listed. The lead manager and overall coordinator is the Paris office of Schroder Salomon Smith Barney, with ABN AMRO Rothschild and Robertson Stephens International acting as senior co-lead managers. Banque Nomura France also is participating.

Ethypharm made an operating profit of EUR12.6 million (12 percent of sales) in 2000, despite intensifying its research and development activities. However, CEO Debrigeas said the company did not plan any dividend payouts in the foreseeable future but intended to continue its policy of plowing all profits back into the business.

The company plans to use the funds raised to further develop its activities in the United States, which already account for over 20 percent of its revenues, and to acquire new products. It already has products using four different drug delivery technologies on the market in over 70 countries, and its medium-term objective is to develop into a fully integrated pharmaceutical company with the emphasis on niche markets. It intends to rely less on co-development and marketing agreements that earn it milestone payments and royalties and increasingly to generate direct sales revenues by handling its own marketing and distribution.

Debrigeas stressed that Ethypharm does not develop new drugs, but novel formulations and modes of administration for existing compounds that have proved their worth, thus reducing R&D risk, costs and lead times. Its main products, a sustained-release formulation of Diltiazem for the treatment of hypertension and angina, and morphine sulfate, for the treatment of pain, have market shares in Europe of 15 percent and 26 percent, respectively.

For the future, Ethypharm has high hopes of a modified-release injectable version of the anticancer drug 5-FU, which is currently in Phase II trials for the treatment of glioblastoma. It is expected to receive regulatory approval in 2003 and Ethypharm said it hopes to have it on the market by 2004 or 2005. The drug has already been granted orphan status in the U.S. and Europe and an application is pending in Japan. Other products in Ethypharm¿s pipeline include new versions of the anticoagulant heparin and of the anticancer drugs cisplatin and interferon-beta.