By Brady Huggett
Taking just under half of its shelf registration down, Orchid BioSciences Inc. is selling about 6 million shares in a private placement that will gross nearly $36 million.
Robertson Stephens Inc., of San Francisco, is the placement agent. The shares are being offered through a prospectus supplement pursuant to Orchid¿s shelf registration statement worth up to $75 million that was filed less than a month ago. On the day the shelf registration was announced, Orchid¿s stock closed at $4.08. (See BioWorld Today, May 11, 2001.)
Barbara Lindheim, vice president of strategic communications for Princeton, N.J.-based Orchid, said a recent addition of an investor pushed the number of shares to ¿just shy¿ of 6 million, to put the total proceeds for the offering, at $6 per share, at approximately $36 million. It leaves Orchid with roughly $40 million still on the shelf.
After the private offering, Orchid will have approximately 39 million shares outstanding. Lindheim said Orchid was not ready to disclose investor¿s names, but she described them as a ¿nice group of blue chip investors.¿
Lindheim said the funds would be used to launch products in Orchid¿s single nucleotide polymorphism scoring products and services area, pay for its Platform Propagation expenses, and pump money into its Pharmaceutical Value Creation business. Orchid has SNP analysis technology, called SNP-IT, and markets SNPstream instruments and SNPware consumables. It focuses on identifying proprietary medical applications of SNPs through its Pharmaceutical Value Creation business.
¿We believe this gives us 18 to 24 months of comfortable cash position,¿ Lindheim said. She added that there were no plans in the near future to draw down the remaining $40 million.
¿Strategically, we thought it was important to bolster the financial position of the company,¿ Lindheim said. ¿Many investors felt a year¿s cash was not a good place for Orchid to be. Now running out of cash is not an issue this year. It removes that overhang from our stock price.¿
Orchid had about $51 million in cash, cash equivalents, and short-term investments as of March 31. It had a net loss of about $11.5 million in the first quarter of 2001. Its stock (NASDAQ:ORCH) climbed 39 cents Wednesday to close at $6.83.
The $6 selling price pleased Lindheim.
¿Typically, these types of offerings sell at about a 20 percent discount,¿ she said. ¿We closed at a 7 percent discount, and a 12 percent premium to our 30-day average. We consider it very positive.¿
To help expand its presence in Europe, Orchid acquired all the assets of London-based AstraZeneca plc¿s subsidiary, Cellmark Diagnostics, in February. The move also was meant to increase revenues for Orchid, and the company did show a 60 percent increase in revenue in the first quarter of 2001. It pulled in $5.6 million, up from 2000¿s first quarter revenues of $3.5 million. (See BioWorld Today, Feb. 14, 2001.)