By Mary Welch
Abgenix Inc. raised $45 million in a public offering that the company said would be its last.
The company has ¿more than enough money to last us until we break even in 2001,¿ said Kurt Leutzinger, vice president and chief financial officer of Fremont, Calif.-based Abgenix, which sold 3 million shares of common stock at $15 per share, granting underwriters an option to buy 450,000 more shares at the offering price to cover overallotments.
The offering, announced in February, is expected to close Tuesday.
Its success is in sharp contrast to Abgenix¿s initial public offering (IPO) last summer, when the company raised $20 million by selling 2.5 million shares at $8 each. It had registered to raise about $33 million from the sale of 3 million shares at $11 per share. (See BioWorld Today, July 6, 1998, p. 1.)
At the time of the IPO, the company intended to spend about $15 million for research and development, including preclinical and clinical trials within the year, and another $3.8 million for the final cross-license and settlement payment to former shareholders of GenPharm International Inc., now a subsidiary of Medarex Inc., of Annandale, N.J.
¿We did that IPO in the teeth of a horrible market,¿ Leutzinger said. ¿We sold fewer shares at lower prices than we had hoped. Today, it¿s a better market. Plus, we¿ve progressed as a company. We have more partners and good clinical data.¿
He said Abgenix had ¿over-performed and over-fulfilled our promises.¿
Company Has Four Compounds In Development
The financing will be used for research and development, including the clinical and preclinical trials of four product candidates as well as general working capital.
¿This gives us a strong capital base, which gives us strength in negotiations with big partners,¿ Leutzinger said. ¿Big pharmaceutical companies can be tough negotiators, unless you outlast them. We have the capital to outlast them. We now have leverage.¿
In addition to licensing agreements for its XenoMouse technology, which produces fully human antibodies, Abgenix has four compounds in various stages of development.
¿This financing allows us to develop our product candidates through efficacy trials ¿ which, again, gives us more leverage in negotiating with potential partners and helps us add more value to the deal,¿ Leutzinger said.
The company¿s most advanced compound is ABX-CBL, which will enter Phase III this year. ABX-CBL is a therapy to treat steroid-resistant graft-vs.-host disease, a fatal and untreatable complication of allogeneic bone marrow transplants. The product was licensed from the Los Angeles-based CV Cancer Center, which was set up by Ron Billings. He discovered the CBL antigen, which is overexpressed on activated immune cells, and developed antibodies to it.
Another compound, ABX-IL8, will enter Phase II trials this year in patients with moderate to severe psoriasis. ABX-IL8 is an antibody to interleukin-8 that targets inflammation in psoriasis patients.
Slated to start Phase I trials this year is ABX-EGF, an antibody to epidermal growth factor, for the treatment and prevention of cancer. Abgenix is scaling up its manufacturing of the product.
Currently in preclinical trials, with no immediate plans to move it into Phase I, is ABX-RB2, a fully human version of the CBL antibody for chronic immunological disorders.
Offering Follows $120M Genentech Deal
Abgenix¿s offering came on the heels of the company¿s $120 million deal with Genentech Inc., of South San Francisco, which allows Genentech to use the XenoMouse technology in-house and covers 10 antigen targets. (See BioWorld Today, Jan. 29, 1999, p. 1.)
¿It¿s hard for us to do anything where we are not in the middle of a deal or right at the end of a deal,¿ Leutzinger said. ¿We¿ve just been making a lot of deals.¿
Managers of the offering were BancBoston Robertson Stephens Inc. and Pacific Growth Equities, Inc., both of San Francisco; and Lehman Brothers Inc., of New York.
Two new investors are Peregrine Capital Management Inc., of Minneapolis, and T. Rowe Price, of Baltimore. Current investors who also participated include Dean Witter Reynolds, of New York; Wall Street Associates, of La Jolla, Calif.; Pictet & Cie, of Geneva, Switzerland; Janus Capital Corp., of Denver; Invesco Asset Management Group, of Denver; Nicholas Applegate Capital Management, of San Diego; Orbimed Advisors, of New York; and Frontier Capital Management Co., of Boston.
Abgenix¿s largest institutional investor, Zesiger Capital Group LLC, of New York, purchased 1.1 million shares from Cell Genesys Inc., of Foster City, Calif. Abgenix was formed as a wholly owned subsidiary of Cell Genesys in mid-1996. After the sale to Zesiger, Cell Genesys reduced its equity from 30 percent to 23 percent of the 15 million outstanding shares.
Zesiger now owns 1.5 million shares of the company.
Abgenix¿s stock (NASDAQ:ABGX) closed Thursday at $15, down $0.562. n