PARIS ┬┐ The Strasbourg-based gene therapy company Transghne S.A., which is quoted on both the Nasdaq and the Nouveau Marchi in Paris, is seeking to raise additional funding of more than EUR100 million (US$96.5 million) through a capital increase equivalent to some 20 percent of its existing equity.

It has filed a proposal with the Securities and Exchange Commission in New York and its Paris equivalent, the Commission des Opirations de Bourse, for the issue of 1.5 million new shares, only a small proportion of which would be taken up by existing shareholders.

The leading shareholder, Biomirieux Alliance, has agreed to purchase new shares worth a maximum of FFr40 million (EUR6.1 million), while the French Muscular Dystrophy Association (AFM, Association Frangaise contre les Myopathies) is subscribing up to FFr15 million. In addition, 300,000 new shares are to be reserved for staff under the terms of a stock option program that shareholders have authorized, while the lead manager of the operation, Leh man Brothers, is being offered a greenshoe of 225,000 shares. At the same time, it is proposed to abolish the preferential subscription rights of existing shareholders.

Alain Mirieux, who controls both Biomirieux Alliance and another large shareholder in Transghne, TSGH, is effectively the majority shareholder in the company with 54.3 percent of the equity, but BioWorld International was told that the capital increase would reduce his combined holding to 40 percent to 45 percent. An extraordinary meeting of shareholders is taking place next week to approve the financing, which is ┬┐dependent on market conditions.┬┐

Transghne is taking advantage of an upsurge in the market valuation of biotechnology companies in France, which has resulted in its own share price rising fourfold over the past five months, from EUR26.50 on Oct. 26 to more than EUR100. That gives the company a stock market valuation of some EUR960 million at the moment, considerably more than when it drafted the terms of the proposed capital increase. Moreover, it has up to two years to decide whether to put it into effect.

The company recently announced a 48 percent fall in its net loss to EUR18.2 million in 1999 from EUR35 million the year before, leaving it with cash and cash equivalents of EUR50.2 million as of Dec. 31. That is equivalent to more than two years' funding, according to Finance Director Bernard Davitian, even taking account of an anticipated increase in its monthly burn rate to FFr12 million to FFr13 million or even FFr15 million this year from FFr10 million in 1999.

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