Nanogen Generates $64M In IPO, Partner Investments

Nanogen Generates $64M In IPO, Partner Investments

By Lisa Seachrist

Washington Editor

WASHINGTON — Nanogen Inc., the San Diego company merging microelectronics with molecular biology, completed an initial public offering (IPO) Monday worth approximately $64 million.

The company sold 3.9 million shares at $11 per share to raise $42.9 million, and has granted its underwriters an option to purchase an additional 585,000 shares to cover any overallotments. Comanagers of the IPO are Morgan Stanley & Co., Lehman Brothers Inc. and SBC Warburg Dillon Read Inc., all of New York.

In addition, Nanogen will sell an aggregate of 1.91 million shares at the offering price to corporate collaborators Becton, Dickinson & Co., of Franklin Lakes, N.J.; Hoechst AG, of Frankfurt, Germany; and Elan Corp. plc, of Dublin, Ireland. The company's prospectus doesn't detail how that aggregate will be divided but deals with Hoechst and Elan include the purchase of aggregates of $10 million and $5 million worth of common stock respectively.

Following the offering and public placement, Nanogen will have approximately 18 million shares outstanding prior to any sale of overallotments.

Nanogen's technology incorporates a proprietary semiconductor microchip into a fully automated system designed to rapidly identify and analyze any test sample containing charged molecules. Using microelectronics, the charged molecules move to and from designated microtest sites on the semiconductor microchip, accelerating the binding at each site.

Applications Include Drug Discovery, Genomics

Nanogen is developing the technology for use in diagnosing infectious disease through its Becton Dickinson collaboration, in drug discovery through the Hoechst deal, and in genomics through the collaboration with Elan. Under terms of the company's arrangement with Becton Dickinson, the collaboration will be terminated if Nanogen fails to meet certain milestones by June 30, 1998.

As noted in the IPO prospectus, Nanogen will use roughly $27.9 million of the funds raised for research and product development, including internal development, acquisitions, licenses and to cover commitments from collaborations. Approximately $13.2 million will be used for facilities expansion, manufacturing scale-up and other capital expenditures. Nanogen will use about $5.2 million for establishing regulatory and sales and marketing capabilities. The balance will go to working capital and general corporate use.

In March, Nanogen raised $26 million in a round of private financing to develop its products, which are centered on its proprietary Automated Programmable Electronic Matrix (APEX) microchip array technology. (See BioWorld Today, March 5, 1997, p.1.)

As of Dec. 31, 1997, Nanogen had $19.5 million in cash and cash equivalents, with a net loss of $11.2 million for the year.

Nanogen's stock (NASDAQ: NGEN) closed Tuesday at $11.25 up $0.25. *