By Mary Welch
RiboGene Inc. will use $20 million raised in an initial public offering (IPO) and a private placement to intensify the its research into translation control of gene expression for the treatment of drug-resistant infectious diseases.
Translation is the process used by cells to synthesize proteins. RiboGene uses its platforms to discover compounds that inhibit pathogen specific translation mechanisms (PSTMs). By identifying components of the translational process unique to proteins essential to the organisms' survival, RiboGene expects to find new targets for drugs to battle bacterial, fungal and viral infections.
In the IPO, the Hayward, Calif., company sold 2.3 million shares of common stock priced at $7 per share for gross proceeds of $16.1 million. Concurrently with the offering, the company sold 571,429 shares, again at $7 per share, to Abbott Laboratories, of Abbott Park, Ill, in a private placement for an additional $4 million. Abbott agreed to buy the shares as part of a collaboration agreement signed in April 1996.
Gruntal & Co. LLC, of New York, acted as underwriter and has an option to purchase another 345,000 shares to cover overallotments.
RiboGene's stock (AMEX:RBO) closed Friday at $7.
The eight-year-old company initially sought $25.3 million when it registered with the Securities and Exchange Commission (SEC) for the IPO in October 1997 and proposed selling 2.3 million shares at $11 per share. (See BioWorld Today Oct. 30, 1997.)
Market Conditions Dictate Downsized Offering
However, the company last month cited market conditions when it refiled with the SEC, adjusting the numbers downward. At that point, RiboGene listed a $7 price and proposed selling 2.7 million shares, which would bring in $18.9 million in addtion to Abbott's $4 million, for a total of $22.9 million.
The Abbott and RiboGene alliance goes back two years to a research and development collaboration to discover antifungal drugs using RiboGene's translation technology. The deal called for Abbott to fund the development effort, make an initial equity investment of $3.5 million and then another $4 million investment at a later date when RiboGene filed an IPO. Abbott also will pay $9 million for each product developed. (See BioWorld Today, May 3, 1996. p. 1.)
"We are very pleased with the results, especially when you consider that we re-filed in April and then the total lapsed time until we priced the stock was six weeks," said Charles Casamento, CEO. "I'd have to say that things went quite smoothly from [the re-filing] point on and we came very close to what we estimated. We're happy we got the deal done."
After all the expenses of the IPO and private placement are paid, the company expects to net $16.9 million, which will be used to expand internal chemistry capabilities, advance drug discovery programs and repay debt.
RiboGene said the funding will support operations into 2000. The company has about 5.8 million shares outstanding. *