By Debbie Strickland
Special To BioWorld Today
Gensia Sicor Inc. is raising $35 million for operations and debt retirement through a private placement of units consisting of shares and warrants.
The Irvine, Calif., company has largely left biotechnology behind, focusing on such areas as generic chemotherapies and production of bulk drug substances, but still operates a research and development subsidiary, Metabasis Therapeutics Inc., of San Diego.
In the placement, Gensia Sicor sold 6.5 million units at $4 each, with each unit consisting of a share of common stock and a warrant to buy one-tenth of a share of common stock at an exercise price of $5.75. The sale of another 2.175 million units is expected to close June 10.
The company¿s president and CEO, Carlo Salvi, purchased 2.5 million of the units for $10 million in a transaction that largely amounts to swapping debt for units. Salvi bought $10 million worth of 8 percent convertible notes in December 1998. That debt will be paid using funds from the private placement, saving the company $800,000 annually, according to Laurie Little, associate director of investor relations.
Gensia Sicor will use the remainder of the funds to pay down other debt (it has about $50 million in long-term debt) and for general corporate purposes.
Investors other than Salvi were not disclosed.
Gensia Sicor owns 92 percent of Metabasis; collaborative partner Sankyo Co. Ltd. acquired the other 8 percent for $7.25 million in late 1997. The companies are conducting basic research to discover and develop drugs for the treatment of Type II diabetes.
Metabasis also has a research collaboration with Pfizer Inc., of New York, in the field of pain management.
The subsidiary, whose research and development spending dropped from $13.8 million in 1996 to $7.8 million in 1997, likely will be spun off in the future, Little said.
¿We are looking for ways to make Metabasis independent from Gensia Sicor,¿ she said. ¿Slowly but surely we¿re divesting parts of the business that don¿t fit the strategic direction.¿
Gensia Sicor was born in November 1996 when Gensia Inc. reached an agreement to acquire Sicor SpA, of Milan, Italy, and two Mexican companies. Gensia had suffered product development and stock setbacks, and made the move to position itself as a maker and marketer of more traditional pharmaceutical products. The company¿s product sales totaled $168 million in 1998.
The shares covered under the placement bring the company¿s total shares outstanding to 89 million. Gensia Sicor¿s shares (NASDAQ:GNSA) closed Friday at $4.25, up 6.25 cents. n