By Lisa Seachrist
OSI Pharmaceuticals Inc. raised $56 million through the sale of 3.325 million shares of newly issued common stock to several institutional investors.
The company sold the shares at $17 each, an 8 percent discount to a 10-day trailing market average. The shares have yet to be registered with the SEC.
OSI intends to use the funds to further the clinical development of its pipeline of drugs.
Key investors in the transaction include Janus Healthcare Fund, of Denver; The SMALLCAP World Fund (managed by San Francisco-based Capital Research International); UK-based International Biotechnology Trust (managed by Rothschild Asset Management); and Biotechnology Value Fund, of San Francisco. Prudential Vector Healthcare Group in New York and Lazard Freres & Co. served as financial advisers.
"We were quite pleased with the investors we attracted with this financing," said Kathy Galante, corporate communications representative at OSI. "We also developed a nice banking relationship as well."
Upon completion of the offering, the company will have 26 million shares outstanding and $75 million cash on hand. The company will use the funds to develop its proprietary drug discovery and development programs.
OSI will focus some of the funds on the development of its G-protein-coupled receptor (GPCR) program, its functional genomics program and its proprietary cancer discovery program. The GPCR program targets heart disease, asthma, Parkinson's disease and glaucoma. The company has four proprietary drug candidates in this area, and one partnered collaboration with Solvay Group, of Brussels, Belgium.
In a collaboration with Pfizer Inc., of New York, OSI is in Phase II development of an epidermal growth factor receptor anticancer drug (CP-358,774). The companies also are testing an inhibitor of a key mediator of ras oncogene function (CP-609,754) in a Phase I study.
In addition, OSI is working with Sankyo Co. Ltd., of Tokyo, on an anti-infectant; with Hoechst Marion Roussel on gene transcription-based drugs to treat certain inflammatory diseases, viral infections, metabolic diseases and cardiovascular diseases; and has a research and development agreement with Novartis AG, of Basel, Switzerland, for TGF-beta 3 for the treatment of chronic skin wounds.
In September, the company entered into an agreement with Tanabe Seiyaku Co. Ltd. to develop small-molecule drugs to treat Type II diabetes. (See BioWorld Today, Sept. 2, 1999, p. 1.)
OSI's stock (NASDAQ:OSIP) closed Friday at $25.25, up $3.