By Mary Welch
Genencor International Inc. threw its hat into the initial public offering (IPO) ring by filing to raise $150 million to help finance the development of its genetically based biotechnology products.
Merrill Lynch, of New York, is the lead underwriter. Also participating are Chase H&Q, Credit Suisse First Boston Corp. and Salomon Smith Barney Inc., all of New York.
The company, based in Palo Alto, Calif., posted 1999 revenues of $316.6 million, and a net income of $17.9 million. As of March 31, the company had $53.9 million in cash. For the first quarter of 2000, which ended March 31, it had $79.6 million in revenues and a net income of $16.8 million.
The company's revenues, current cash and the public offering should satisfy its operating needs for the "foreseeable future," according to the registration statement.
The company's net tangible book value as of March 31 was $33.5 million, or 34 cents per share, based on an aggregate of 100 million shares of common stock outstanding. That number excludes 11.47 million shares of common stock issuable upon exercise of outstanding options under a stock option plan.
Founded 18 years ago, Genencor boasts more than 3,000 owned and licensed patents and patent applications. The company delivers more than 250 products to customers in more than 80 countries, it said in the registration statement.
Genencor's five largest customers account for more than 55 percent of its 1999 revenues, with Cincinnati-based Procter & Gamble Co. making up 30 percent of that revenue. Also, some 60 percent of the company's revenue is derived from international operations.
Genencor uses an integrated suite of technology platforms, including gene discovery and functional genomics, molecular evolution and design, and human immunology. In order to discover and commercialize novel biologically derived materials, or biomaterials, Genencor has developed an integrated gene-based approach, called i-biotech. I-biotech integrates several related technology platforms that are applied to the discovery, optimization, production and delivery of biomaterials.
With the i-biotech system, Genencor can discover genes whose encoded proteins can be produced in a host production organism, modify the genes to produce an optimized protein and reduce the protein's potential to cause a human allergic response.
The i-biotech approach includes several technology platforms, including gene discovery and functional genomics, biomaterial production systems, molecular evolution and design, human immunology, metabolic pathway engineering and formulation delivery systems.
Using the i-biotech system, Genencor has taken an enzyme derived from an organism living in an extreme-alkaline, high-temperature environment from gene discovery to commercial production in less than a year. It is also using its i-biotech approach to develop a proprietary agent for the treatment of human papilloma virus and a novel process for the conversion of biomass to ethanol.
Genencor Inc. was founded as a joint venture between South San Francisco-based Genentech Inc. and Corning Inc., of Corning, N.Y. to develop and commercialize genetically engineered enzymes for industrial uses. Eastman Kodak Co., of Rochester, N.Y., purchased a 25 percent interest in 1987.
Genencor International Inc. was started in 1990 when Cultor Ltd. and Eastman Kodak formed a joint venture in the industrial biotechnology area and acquired Genencor Inc. In 1993, Kodak transferred its 50 percent interest to Eastman Chemical Co. In 1999, Danisco A/S acquired Cultor Ltd., of Ardsley, N.Y., now known as Danisco Finland OY.
According to the registration statement, based on an ownership of common stock, Eastman Chemical Co. and Danisco A/S each owns 48.2 percent of Genecor International.
Genencor's proposed Nasdaq ticker symbol is GCOR.