By Karen Pihl-Carey
A second company - this time Aurora Biosciences Corp. - withdrew its proposed public offering last week. The company said only a week ago it wanted to raise $207 million by selling 3 million shares of stock.
Explaining the withdrawal, Stuart Collinson, chairman, president and CEO of Aurora, pointed the finger Friday at market conditions. Aurora planned on selling the stock at an assumed price of $72.88 per share, but the day the offering was announced, the stock closed at $51.875, down $23.50 from the day before. The stock (NASDAQ:ABSC) closed Friday at $55, up $4.00.
"The market has been very turbulent over the last week, and we felt these were not the right conditions to start a public offering," Collinson told BioWorld Today. "Aurora has around $100 million of cash and is not burning cash and, as such, we don't have to proceed with an offering if the market conditions are not right."
Earlier last week, Symyx Technologies Inc., of Santa Clara, Calif., withdrew its offering of 2.75 million shares, citing market volatility as the main reason. (See BioWorld Today, March 23, 2000, p. 1.)
Other companies - such as Maxygen Inc., of Redwood City, Calif. - went ahead with offerings, despite market conditions, accepting considerably less in proceeds than originally anticipated. Maxygen planned on raising about $250 million when its stock traded at about $170 earlier this month. It priced the offering of 1.5 million shares at $97 per share last week, raising the company about $145.5 million gross. (See BioWorld Today, March 6, 2000, p. 1.)
Mike King, senior analyst at New York-based BancBoston Robertson Stephens Inc., said he does not know why some companies are choosing to bring in less than expected. "If it were me, I would pull" the offerings, he said. King's firm was to be one of Aurora offering's managing underwriters.
"If managements have any loyalty to shareholders and confidence in the outlook for their business prospects, they'll understand that what we're in right now is a temporary situation, which is the confusion caused by these statements made by [President] Clinton and [British Prime Minister Tony] Blair," King said. "Then, they'll come back sometime in the future."
Most of the genomics stocks, if not all of them, are "broken," King said, and will take some time to repair. Whether that takes days, weeks or months, King doesn't know. "I would think less than a year, but I have no clue."
The Clinton/Blair statement reaffirmed the goal of universal access to the raw sequence data generated by the efforts of the Human Genome Project. Stocks plunged in response to the news, a result of an ignorant investor community, analysts have said. (See BioWorld Today, March 16, 2000, p. 1.)
Aurora, based in San Diego, planned to use proceeds from its public offering to fund research and development activities, as well as general corporate purposes and working capital. In February, the company raised $75 million in a private stock offering. (See BioWorld Today, March 21, 2000, p. 4; and Feb. 8, 2000, p. 1.)
Founded in 1995, Aurora provides systems and services that assist in drug discovery. Its core technologies include GenomeScreen, its ultra-high-throughput screenings system and the GeneBLAzer Reporter System, which is used to monitor any signal linked to transcription.