By Kim Coghill
Kosan Biosciences Inc. raised $70 million by selling 5 million shares at $14 per share in an initial public offering that commenced last week.
The Hayward, Calif.-based company will use the proceeds for advancing its drug candidates through preclinical and later-stage developments and discovering or acquiring new drug candidates, according to Michael Ostrach, Kosan's chief operating officer. Other uses of the money are for expanding Kosan's technology platform, capital expenditures, working capital, general corporate purposes and possible acquisitions.
The company uses proprietary technologies to develop drug candidates from natural product compounds known as polyketides, using gene-manipulating technologies to generate candidates.
Lehman Brothers Inc. was the leading managing underwriter and CIBC World Markets Corp. and SG Cowen Securities Corp. were co-managing underwriters. The underwriters have the option to purchase an additional 750,000 shares to cover overallotments.
On June 30, Kosan reported $32 million in cash available, and net proceeds from Thursday's public offering total $64 million. The company has 23,845,000 shares outstanding. For the first six months of the year the company had $2.2 million in revenues, and posted a net loss of $17.9 million.
Kosan's stock (NASDAQ:KOSN) closed Monday at $14.125, up 12.5 cents.
The company in April had proposed an IPO of 5 million shares at $14 to $16 each, expecting to raise $80 million. (See BioWorld Today, April 8, 2000, p. 1.)
Kosan has a collaborative research agreement with The R.W. Johnson Pharmaceutical Research Institute, a Johnson & Johnson company, to develop the next-generation ketolide - analogues of the polyketide erythromycin - for their program in infectious disease. Compounds resulting from this two-year-old collaboration are in preclinical evaluation, Ostrach said.
Another collaboration exists with the University of California, San Francisco on a treatment for mucus hypersecretion. This is an early-stage project likely to result in preclinical testing within a year.
The company also has a cancer compound in preclinical studies. The idea is to develop a polyketide that acts on Taxol-resistant tumors. The company's research also includes programs in immunosuppression, nerve regeneration and gastrointestinal motility. The company has no product in the clinic as yet.