By Randall Osborne

Bypassing for now the shaky stock market, GenVec Inc. withdrew its initial public offering (IPO), which was to have pumped funding into development of its ischemic heart disease therapy.

Paul Fischer, president and CEO of Rockville, Md.-based GenVec, confirmed the uncertain market as the reason GenVec pulled the IPO. In a letter to the Securities and Exchange Commission, he wrote the company "has elected not to proceed with the offering due to general market conditions and a determination that it would not be in the company's best interest to proceed."

Mark Simon, a managing director for BancAmerica Robertson Stephens, in San Francisco, said there was "significant interest, but it was price-sensitive. In view of the discount that would have been required, [GenVec] felt it best to wait and we concurred." Simon's firm was co-manager of the proposed offering.

GenVec filed for the IPO in May, intending to sell 2.5 million shares at between $11 and $13 per share, which — at the middle range of $12 per share — would have raised $30 million. (See BioWorld Today, May 4, 1998, p. 1.)

The company's lead product is BioBypass, a modified, replication-deficient adenoviral vector that delivers the vascular endothelial growth factor gene VEGF 121 into cells of heart muscle to promote blood vessel growth around blockages.

Used alone or with existing therapies, the treatment targets coronary artery disease and peripheral vascular disease.

GenVec Fundamentals Strong, Analyst Says

The injected gene expresses the VEGF protein, which acts on endothelial cells to promote blood vessels to redirect blood around heart blockages, thereby providing oxygen and nutrients to needy tissues.

"They're [conducting trials] in humans, and the trials are progressing smoothly," Simon said. "The company has very strong fundamentals."

Last year, Warner-Lambert Co., of Morris Plains, N.J., pledged more than $100 million as development and marketing partner for BioBypass in a five-year deal. Included in the agreement was a stock purchase at the time of the IPO. (See BioWorld Today, Sept. 10, 1997, p. 1.)

Simon pointed out a GenVec competitor, San Diego-based Collateral Therapeutics Inc. (CTI), recently dropped its estimated IPO price to $8 per share, after proposing a range of $11 to $13. CTI went public at $7.25 per share. (See BioWorld Today, July 6, 1998, p. 1.)

"They came out at a huge discount, and the stock has fallen almost 20 percent since then," Simon said. "It continues to fall." CTI's stock (NASDAQ:CLTX) closed Monday at $6.25, unchanged.

The IPO market has been weak all year, Simon observed, and lately "gone from bad to worse."

CTI, partnered with Seattle-based Targeted Genetics Corp., is testing a recombinant adeno-associated viral vector for delivering the adenylycyclase gene into heart cells to treat congestive heart failure. *