By Matthew Willett
Variagenics Inc.'s stock soared on its first day of trading following a $70 million initial public offering of 5 million shares of common stock at $14 apiece.
The stock (NASDAQ:VGNX) gained $10.50 Friday, or 75 percent, to close at $24.50.
The IPO total was less than the $100 million the pharmacogenomics company sought when it registered for the IPO in March.
Variagenics, of Cambridge, Mass., has about 22.3 million shares outstanding. As of March 31, the company had cash, cash equivalent and short-term investments of $21.6 million.
Variagenics, founded in 1992, focuses on developing technologies for the discovery and commercialization of drugs using pharmacogenomics, the study of the genetic differences between individuals, notably characterized by single nucleotide polymorphisms (SNPs), and an individual's response to a drug. It intends to use the proceeds from the IPO for general corporate purposes and research and development activities.
Credit Suisse First Boston Corp., Chase H&Q and SG Cowen Securities Corp. are underwriting the offering. They have an option to purchase up to an additional 750,000 shares to cover overallotments.
Variagenics filed for the offering in March, just after raising $20 million through a self-managed private placement with investors including The Sprout Group, of Menlo Park, Calif.; Atlas Venture, of Boston; Oxford Bioscience Partners, of Boston; CIBC, of New York; Forward Ventures, of San Diego; and Kummell Investments, of Gibraltar. (See BioWorld Today, March 31, 2000, p. 1.)
The company had raised $55 million before the IPO.
Variagenics' database of SNPs totals more than 18,000 entries. The proprietary database includes pharmacogenomic genetic variability data relevant to major drug targets, including those related to oncology, cardiovascular and inflammatory diseases and central nervous system disorders.
The company has been targets SNPs for more than three years and plans to select pathways in extreme detail, a company official told BioWorld Today previously. "We are going to characterize them in a large populations so that we can understand statistically the contributions of SNPs."
Variagenics intends to target 2,000 genes this year.
The company has discovery tools technology to identify drug activity-relevant genetic information and DNA analysis technology. It's Variagenic-Registered Trademark- Impact Program contains five proprietary tools used to identify genetic information.
In a collaboration with Waters Corp., of Milford, Mass., Variagenics is working to develop and commercialize kits utilizing NuCleave technology, tools that allow researchers to use mass spectrometry to detect SNPs. Kit sale royalties and milestone fees from this collaboration could yield Variagenics $7 million.
In a separate agreement with Covance Inc., of Princeton, N.J., Covance funds assay development and pays royalties for laboratory tests for genotyping and haplotyping technologies, tools for identifying single SNPs and groups of SNPs, respectively.