By Karen Pihl-Carey
Aviron is seeking net proceeds of about $125.6 million through a public offering of 3 million shares that will help finance a regulatory filing for FluMist later this year. It also expects to raise another $14.7 million in a concurrent private placement.
The company also said it plans to submit a biologics license application (BLA) for FluMist in the fourth quarter of this year, and that it is working with a contract manufacturer to deal with facilities compliance issues.
At an assumed public offering price of $44.44 per share, Aviron¿s closing stock price on Tuesday, the company could raise net proceeds from the public offering of $140.4 million if an overallotment option is exercised. Of the 450,000 shares for the overallotment option, 100,000 will be sold by a selling stockholder and the rest by the company.
Underwriters for the offering are Morgan Stanley Dean Witter, of New York; Bear Stearns & Co. Inc., of New York; and U.S. Bancorp Piper Jaffray, of Minneapolis.
In addition to the public offering, Aviron plans to sell about $14.7 million of its common stock to American Home Products Corp. (AHP), of Madison, N.J., in a private placement at a price per share equal to the net proceeds per share to the company in the public offering. Based on the offering price of $44.44, Aviron will issue a total of 347,423 shares to AHP at $42.22 per share.
Aviron¿s stock (NASDAQ:AVIR) closed Wednesday at $38.75, down $5.687, or 12.8 percent.
In addition to the public offering and private placement, the company said its plans to submit a BLA for FluMist during the fourth quarter of this year as a preventive treatment for influenza in children and adults.
The company said last fall it would not submit the BLA in 1999, as expected, due to inconsistent test results observed during validation exercises. The company now believes the inconsistencies were associated only with certain assays, or tests, and not associated with the product or the manufacturing process. (See BioWorld Today, Nov. 16, 1999, p. 1.)
But the company also said Wednesday its contract manufacturer, Celltech Medeva, a marketing arm of Slough, UK-based Celltech Group plc, is having facilities compliance issues associated with inadequate validation of certain utility systems at its facility near Liverpool, England. The utilities, such as water and clean steam, are used to prepare supplies used in the manufacture of FluMist, a fact that may explain Aviron¿s stock drop. Medeva said it is working with the FDA to address the issues, and Aviron is working with Medeva to eliminate the need for the utilities in association with FluMist manufacturing.
As for the public offering and private placement, the company intends to use the net proceeds for FluMist regulatory filings, producing and testing validation lots, manufacturing and commercialization expenses of FluMist in its current formulation and development of a liquid form of FluMist. The proceeds also will go to research and development of other pipeline products, the development of infrastructure to support the activities, the potential development of additional manufacturing capacity and other general corporate purposes.
The company will have about 20.9 million shares outstanding after the public offering and the private placement. Both transactions will give Aviron a sturdy cash position, with about $210.6 million. The company still expects, however, that it will need to raise substantial additional capital to continue to fund the development and commercialization of FluMist.
In January, the company secured $48 million in equity financing from Acqua Wellington Asset Management LLC. The funds are available in monthly $4 million increments for one year. (See BioWorld Today, Jan. 14, 2000, p. 1.)
In clinical trials, FluMist has been shown to reduce the incidence of middle ear infections in children and seems to trigger an immune response similar to the natural immune response to influenza. It has been administered in more than 13,000 people with no serious adverse events associated with use of the vaccine, Aviron said.
If approved, Aviron would market FluMist with Wyeth Lederle Vaccines, a business unit of the pharmaceutical division of AHP. The company hopes it will be available for the 2001-02 flu season.
Aviron also is working on a liquid formulation of FluMist because international markets do not have distribution channels well suited to the sale of frozen vaccines. Wyeth Lederle initiated a Phase II trial outside the U.S. for the second-generation FluMist.
Aside from FluMist, the company is developing a parinfluenza virus type III vaccine to prevent the most common cause of croup. It recently completed a Phase II trial. An Epstein-Barr virus vaccine to prevent infectious mononucleosis just completed a Phase I trial. And a vaccine for cytomegalovirus will enter a Phase I trial this year. In the preclinical stage, Aviron is working on vaccine candidates for herpes simplex virus type II and respiratory syncytial virus.
The company was in an SEC-imposed quiet period Wednesday and could not comment.