By Mary Welch
Abgenix Inc., a subsidiary of Foster City, Calif.-based Cell Genesys Inc., expects to raise about $33 million through the sale of 3 million shares at a price of $11 per share in an initial public offering (IPO).
When the offering is completed probably by the end of May -- Abgenix will have 11 million shares outstanding, with parent company Cell Genesys owning 41 percent. A prospectus filed with the Securities and Exchange Commission estimated the IPO price at between $10 and $12 per share.
The two underwriters, BancAmerica Robertson Stephens, of San Francisco, and Lehman Brothers Inc., of New York, have a 30-day option following the offering to purchase up to 450,000 shares to cover overallotments.
Within the year, Abgenix intends to spend about $15 million for research and development, including preclinical and clinical trials, 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. The balance of the IPO proceeds is targeted for working capital and other operating expenses and possibly the acquisition of complementary businesses, technologies or products.
As of Dec. 31, 1997, Abgenix, of Fremont, Calif., had cash, cash equivalents and short-term investments of $15.3 million.
Founded in July 1996, the firm develops antibody therapeutic products for the prevention and treatment of several diseases, including transplant-related diseases, inflammatory and autoimmune disorders, and cancer.
Abgenix's XenoMouse technology, which uses a strain of genetically engineered mice, is designed to make fully human antibodies ready for manufacturing scale-up in two to four months after immunization, thus shortening the time it takes to get the antibody therapeutics into clinical trials.
Lead Antibody Targets GvHD
Abgenix said its technology produces antibodies with fully human protein sequences for any disease target that is appropriate for antibody therapy. The technology also is aimed at generating high-affinity antibodies that don't require further engineering.
Its lead product candidate, ABX-CBL, is currently in Phase II trials to ascertain if the antibody can destroy specific activated immune cells without harming the entire immune system. Its target is steroid-resistant graft-vs.-host disease (GvHD), a complication of bone marrow transplants for leukemia patients. The multi-center Phase II study started in January of this year and is expected to be finished by year's end.
Abgenix also has in Phase I trials ABX-IL8, an antibody to interleukin-8 (IL8) that targets inflammation for patients with moderate to severe psoriasis. ABX-EGF, an antibody to epidural growth factor (EGF) and ABX-RB2 (a fully human version of the CBL antibody), are two product candidates for use in the treatment and prevention of cancer and chronic immunological disorders, respectively. Both are in preclinical development.
Since opening its doors, Abgenix's expenses have been paid for by contributions from Cell Genesys of approximately $14.3 million; revenues from collaborative arrangements, most notably with Pfizer Inc., of New York, and Schering-Plough Corp., of Madison, N.J., for which Abgenix will generate antibodies against undisclosed antigen targets; and $27 million in private placements, including $20 million raised in December 1997. Abgenix also borrowed $4 million from Cell Genesys in exchange for preferred stock.
The company reported a net loss of $7.1 million million in 1996 and $35.6 million in 1997.
Revenues were $6.2 million in 1995, $4.7 million in 1996 and $1.3 million in 1997 and came from performing research for Xenotech LP. The revenue decrease was attributed to the fact that Xenotech's research related to developing the genetically modified mice was finished in 1996. Xenotech is a joint venture among Cell Genesys, Abgenix and Japan Tobacco Inc., of Tokyo. *