By Randall Osborne
West Coast Editor
Two months after its subsidiary, CombiMatrix Corp., registered for an initial public offering, Acacia Research Corp. closed an institutional private equity financing of $19 million to keep majority ownership of the biological array chip developer - and to grow more companies.
The sale of about 1.1 million shares leaves Pasadena, Calif.-based Acacia with 17.2 million shares outstanding and "gives us a cushion of working capital, so we can comfortably do both," said Paul Ryan, chairman and CEO.
Acacia owns 58.3 percent of CombiMatrix, based in Snoqualmie, Wash.
"Our goal is to maintain 55 percent," Ryan told BioWorld Today. "The IPO has not been priced, but we feel somewhere around $25 million" will let Acacia meet that goal, he added.
Acacia's offering price was $17.50 per unit, each consisting of one share of common stock and one three-year callable stock purchase warrant. The latter entitles the holder to buy a share at $21, and is callable by Acacia when the closing bid price of the company's common stock averages $26.50 or above for 20 consecutive trading days.
The company's shares (NASDAQ:ACRI) closed Tuesday at $17.687, up 56.25 cents, with 16.07 million shares outstanding. Its 52-week high is a little over $58, and the 52-week low just over $13.
A joint venture established by Acacia and CombiMatrix, called Advanced Material Sciences (AMS), will make use of intellectual property coming out of CombiMatrix, Ryan said.
"We've contributed two-thirds of the capital and CombiMatrix one-third," for a total of $3 million initially, he said. AMS will use CombiMatrix's arrays in fuel cells and fuel cell catalysts, "not dissimilar to how Symyx [Technologies Inc., of Santa Clara, Calif.] has used its applied biology in the material sciences," Ryan said. "It's somewhat uncommon. CombiMatrix's platform is an electrochemistry platform, whereas most are pure biology."
Acacia, which has eight affiliates, owns 67 percent of AMS. Other Acacia concerns deal with Internet music broadcasting and e-mail personalization service. Earlier this month, its subsidiary, MerkWerks Corp., of which Acacia owns 99 percent, sold a recording software product and trademark for an undisclosed amount.
CombiMatrix filed for the IPO in November, aiming to raise $100 million for working capital and to launch and market its products. With $92 million in cash, Acacia, which develops life sciences companies, has eight other affiliated firms and wants to keep its 58.3 percent interest in CombiMatrix, said Pam Tomkinson, director of corporate communications for Acacia. (See BioWorld Today, Nov. 11, 2000.)
Semiconductor manufacturers make the chips, and CombiMatrix uses the chips to build biological arrays.