By Mary Welch
Genomic Solutions Inc., Orchid BioSciences Inc. and Paradigm Genetics Inc. all made it to the NASDAQ trading board, as Genomic Solutions raised $57 million, Orchid $48 million and Paradigm $42 million in their initial public offerings (IPOs).
All three companies however, had to price below their original goals.
Ann Arbor, Mich.-based Genomic Solutions sold 7 million shares at $8 each. In addition, the underwriters have an option to purchase up to 1.05 million shares for overallotment purposes.
When it filed its IPO statement, the company wanted to raise $80 million to $90 million by selling 5 million shares at a price range of $16 to $18 per share. About a month after the filing, the company postponed the offering until the market took an upward turn. (See BioWorld Today, March 24, 2000, p. 1., and March 20, 2000, p. 1.)
Warburg Dillon Read LLC, of New York, was the lead underwriter. Lehman Brothers, of New York, and Dain Rauscher Wessels, of Minneapolis, also served as underwriters.
Genomic Solutions has about 22.7 million shares outstanding.
The company develops, manufactures and markets genomic and proteomic instrumentation, software, consumables and services. Its biochip products are used for large-scale gene expression analysis. Its proteomic products are used to isolate, identify and characterize proteins. The products and systems enable researchers to perform complex, high-volume experiments at lower costs and in less time than traditional techniques, the company said.
Since 1997, the company has sold its products to more than 100 pharmaceutical and biotechnology companies, government agencies and private research institutions. Among its customers are Merck and Co. Inc., of Whitehouse Station, N.J.; Cambridge Antibody Technology Group, of Melbourn, UK; and the M.D. Anderson Cancer Center in Houston.
Customers use the systems to produce biochips, maintain DNA libraries, quantify gene expression levels, and isolate, identify and characterize proteins.
Genomic Solutions reported 1999 revenues of $12 million and a net loss of $11.1 million. As of Dec. 31, it had $1.3 million in cash.
As with Genomic Solutions, Princeton, N.J.-based Orchid had to settle for less money. The company originally intended to sell 8 million shares at a price range of $11 to $13. Instead it sold 6 million shares at $8 each.
Credit Suisse First Boston and Salomon Smith Barney, both of New York, and Robertson Stephens, of San Francisco, served as underwriters. Orchid granted them an additional 900,000 shares for overallotments.
Following the offering, there are 32 million shares outstanding.
In January, Orchid - formerly Orchid BioComputer - raised $72 million in a private placement and purchased Dallas-based GeneScreen Inc., the second-largest provider of paternity testing and genetic diversity analysis. At that time, the company indicated it was considering an IPO in order to become the leader in the post-genomic era. (See BioWorld Today, Jan. 6, 2000, p. 1.)
Founded in March 1995, Orchid has developed proprietary technologies to enhance the way companies generate information about single nucleotide polymorphisms (SNPs), those single base-pair changes within genes that are thought to account for differences in how individuals respond to drugs.
Applying this type of genetic diversity analysis could improve the effectiveness of existing drugs, lead to the development of highly specific and efficacious drugs, and increase the likelihood of successful tissue transplants, the company said.
To accomplish its goal, Orchid has developed Genetic Bit Analysis (GBA) technology, a primer-extension SNP scoring system designed to rapidly generate highly accurate information relating to SNPs at a very low cost. The company is combining this technology with proprietary microfluidics technology to enable it to conduct ultra-high-throughput SNP scoring at its MegaSNPatron facility. The company intends to increase throughput to millions of SNP scores per day and reduce the cost of SNP scoring to pennies per SNP score.
With this strategy, the company hopes to enable pharmaceutical companies to improve identification of lead drug candidates for optimization and development. Orchid has teamed up with Affymetrix Inc., of Santa Clara, Calif., to develop and commercialize SNP genotyping assays using the GBA technology.
Orchid posted 1999 sales of $1.8 million, and a net loss of $24.1 million.
Like the other two companies, Paradigm lowered its expectations in the wake of a shaky market. Originally, Paradigm filed to sell 5 million shares at a range of $14 to $16; it settled instead for 6 million at $7 each.
Based in Research Triangle Park, N.C., the company will use the net proceeds to increase its gene function discovery research efforts, enhance its GeneFunction Factory industrial-scale laboratory and FunctionFinder bioinformatics system, expand its physical infrastructure, and fund other general corporate purposes.
Chase H&Q, of New York, led the underwriter group. Other underwriters included J.P. Morgan, of New York; Pacific Growth Equities, of San Francisco; and Stephens Inc., of Little Rock, Ark. The underwriters were given an option to purchase another 900,000 shares to cover any overallotments.
Paradigm is industrializing the process of identifying gene function in an attempt to develop novel products in crop production, nutrition, human health and industrial products.
Founded in September 1997 by executives from Research Triangle Park-based Novartis Crop Protection, a subsidiary of Novartis AG in Basel, Switzerland, the company developed its GeneFunction Factory to study simultaneously the functions of many genes in a number of selected organisms.
The company studies the effects of altered forms of a gene on an organism and analyzes those effects using its bioinformatics system, FunctionFinder. The company initially is studying the function of genes in Arabidopsis - a model organism related to soybeans, cotton, vegetables and oil seed crops - rice and six filamentous fungi.
Paradigm signed a deal with Monsanto Co., of St. Louis, to develop crop production and nutrition products (see BioWorld Today, Jan. 25, 2000, p. 1). The company also has a deal signed in September 1998 with Bayer AG, of Leverkusen, Germany, to find screening targets leading to new herbicides. (See BioWorld Today, Nov. 3, 1998, p. 1.)
All three companies are still in SEC-imposed quiet periods.
Orchid BioSciences Inc.'s stock (NASDAQ:ORCH) closed Friday on its first day of trading at $10.937, up $2.937, a jump of 47.66 percent.
Genomic Solutions' stock (NASDAQ:GNSL) closed Friday on its first day of trading at $8.375, up 37.5 cents.
Paradigm Genetics' stock (NASDAQ:PDGM) closed Friday on its first day of trading at $7.125, up 12.5 cents.