By Lisa Seachrist
WASHINGTON — Abgenix Inc. and Collateral Therapeutics Inc. raised significantly less money than anticipated in completing their initial public offerings.
Abgenix expected in early April to raise about $33 million from the sale of 3 million shares at $11 per share. Instead, the firm sold 2.5 million shares at only $8 apiece, for a total of $20 million to support development of its antibody therapies for prevention and treatment of transplant-related diseases, inflammatory and autoimmune disorders, and cancer. Abgenix is a subsidiary of Foster City, Calif.-based Cell Genesys Inc.
BancAmerica Robertson Stephens, of San Francisco, and Lehman Brothers Inc., of New York, have underwritten the deal and have the option to purchase up to an additional 375,000 shares at the IPO price to cover overallotments.
As of Dec. 31, 1997, Abgenix, of Fremont, Calif., had cash, cash equivalents and short-term investments of $15.3 million.
The company's need for cash will accelerate, as it intends 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 with GenPharm International Inc., a subsidiary of Medarex Inc., of Annandale, N.J.
In producing antibody therapeutics, the company will rely on its XenoMouse Technology, which uses a strain of genetically engineered mice to make fully human antibodies ready for manufacturing scale-up within two to four months after immunization. The technology is designed to drastically reduce the time needed to get antibody therapies into clinical trials.
Abgenix's lead product candidate, ABX-CBL for treatment of graft-vs.-host disease that results as a complication of bone marrow transplants, is currently in Phase II trials to ascertain if the antibody can destroy specific activated immune cells without harming the entire immune system. Abgenix also is conducting Phase I trials of ABX-IL8, an antibody to interleukin-8 (IL-8) that targets inflammation for patients with moderate to severe psoriasis.
The company's preclinical development program includes ABX-EGF, an antibody to epidermal growth factor (EGF) for the treatment and prevention of cancer, and ABX-RB2 (a fully human version of the CBL antibody) for chronic immunological disorders.
Abgenix's stock (NASDAQ:ABGX) closed Thursday at $8.125.
Collateral Therapeutics Inc. (CTI), of San Diego, had an even more disappointing IPO. It sold 2.2 million shares at $7.25 per share, raising $15.95 million. In April, the gene therapy company anticipated an offering of 3.33 million shares at $12 per share, generating $40 million. Last month, the company decreased the projected price to $8 per share.
Bears Stearns & Co., of New York, served as lead underwriter for the offering, with Raymond James & Associates Inc., of St. Petersburg, Fla., and Vector Securities International Inc., of Deerfield, Ill., participating as co-managers. The underwriters have the option to purchase an additional 330,000 shares at the offering price to cover overallotments.
Heart Gene Therapies Bypass Surgery
CTI uses a non-surgical approach to deliver gene therapy for congestive heart failure and peripheral vascular disease. It also has a gene therapy program covering heart muscle regeneration as a treatment for heart attack.
The company is collaborating with Targeted Genetics Corp., of Seattle, to test a recombinant adeno-associated viral (rAAV) vector developed by Targeted Genetics for cardiovascular gene transfer. Both companies have rights to experiment with delivering the adenylycyclase (AC) gene into heart cells to treat congestive heart failure.
CTI's research indicates the AC gene increases the ability of the heart to contract, which could offer hope to the 4 million U.S. patients suffering from congestive heart failure.
In addition, CTI expects to develop Targeted Genetics' rAAV vector for use in Corgenic, a new gene therapy product designed to increase the heart's ability to pump blood in response to catecholamine solution.
In May 1996, CTI partnered with Schering AG, of Berlin, to develop and commercialize products based on CTI's angiogenesis program for coronary artery disease.
Collateral stock (NASDAQ:CLTX) ended Thursday at $7.562. *