By Mary Welch

There was some good news and some bad news as both Cubist Pharmaceuticals Inc. and Ribozyme Pharmaceuticals Inc. both priced their public offering.

The bad news was that both offerings went for considerably less than what the companies wanted; the good news was that the offerings were completed at all.

¿The market is so wild and volatile that we¿re satisfied to have successfully completed the offering,¿ said Thomas Shea, Cubist¿s vice president of finance and administration and chief financial officer. ¿There is a definite chill in the market and I think you¿re going to find now that only a few select quality companies will complete their offerings. The rest will delay or withdraw them.¿

Cubist sold 2.5 million shares at $33 each, giving the Cambridge, Mass.-based company $82.5 million. Ribozyme sold 3.15 million shares at $18 each for gross proceeds of $56.7 million.

Larry Bullock, chief financial officer for Ribozyme, also was pleased with the results. ¿Obviously we would have liked to have sold for a higher price, but that was the price we could get, which in this market was very good. Our objective was to raise money and we were successful in that. This will allow us to do what we need to do, which is get Angiozyme through clinical trials. We wouldn¿t be closing if we didn¿t get a very good reaction from institutional investors, and we got that, which is a good sign.¿

In addition, Cubist granted the underwriters an option to purchase another 375,000 shares to cover overallotments. Robertson Stephens, of San Francisco, was the lead managing underwriter. Pacific Growth Equities Inc., of San Francisco, and Chase H&Q, ING Barings, and Lazard Freres & Co. LLC, all of New York, served as co-managing underwriters.

When Cubist filed the offering, its stock price was at $51.125, which would have given the company about $128 million. So, within less than a month, the company, on paper, lost about $45.5 million or about one-third of the offering¿s original value. (See BioWorld Today, March 14, 2000, p. 4.)

¿After what¿s happened in the last few weeks, I think it¿s a feather in our cap that we were able to sell all the shares we were offering,¿ Shea said. ¿Again, a lot of biotech companies are reducing the number of shares being offered. We¿re also pleased that we attracted some great new investors.¿

Cubist had between 10 to 15 investors participate in the offering and ¿a great number of them were new investors, which again we¿re very happy about,¿ Shea said.

With this offering, Cubist will have about 26 million shares outstanding. It will use the funds to ¿give us a very healthy balance sheet,¿ he said. ¿A healthy balance sheet gives us the flexibility to grow the company and have a wide range of decisions. It¿s hard to predict how long this money will take us because we don¿t know what direction we¿ll be going. If we decide to do it, for instance, this offering will allow us to take daptomycin to commercialization ourselves. I¿m not say saying we¿re going to, but we now have that option and flexibility.¿

Daptomycin, Cubist¿s lead product, is in Phase III trials for skin and soft-tissue infections and Phase IIa for bacteremia, or bloodstream infections. Enrollment of more than 1,200 patients in the Phase III trial for skin and soft-tissue infections should finish by the end of the year.

In addition, a Phase III trial of daptomycin in urinary tract infections is slated to start and finish this year. A Phase III trial for endocarditis should also begin this year.

Daptomycin is a novel anti-infective agent with potent activity against all gram-positive bacteria. It is a novel cyclic lipopetide antibiotic derived from a fermentation product of Streptomyces roseosporous.

Boulder, Colo.-based Ribozyme saw its anticipated revenue from this secondary filing almost cut in half. Ribozyme filed in early March to sell 3.15 million shares when its stock was at $49.75. At that price, Ribozyme would have received about $147 million. (See BioWorld Today, March 3, 2000, p. 1.)

ING Barings LLC, of New York, was the lead manager. Chase H&Q, also of New York, was the co-manager. The underwriters have an option for another 472,500 shares to cover overallotments.

The company will use the net proceeds to fund preclinical studies and clinical trials of its various product candidates, as well as for research and development purposes. In addition, it will repay a $6.9 million loan from Schering AG, of Berlin.

However, a majority of the proceeds will be used to fund the clinical program for Angiozyme, which is an anti-angiogenesis compound being developed with Emeryville, Calif.-based Chiron Corp. Angiozyme is in a Phase I/II trial for the treatment of solid tumor cancers. Angiozyme is a synthetic ribozyme that specifically inhibits synthesis of the vascular endothelial growth factor receptor, a key compound in the angiogenesis-blood growth pathway.

Ribozyme has three product candidates in preclinical testing and clinical trials and expects to start developing a fourth product candidate by the end of the year.

Cubist¿s stock (NASDAQ:CBST) closed Thursday at $33.25, down $2.375.

Ribozyme¿s stock (NASDAQ:RZYM) closed Thursday at $19.875, down $2.875.

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