By Randall Osborne
Nanogen Inc., which focuses on integrating microelectronics with molecular biology, has filed for an initial public offering (IPO) of up to $40 million, and is undertaking a private placement totaling $21 million with three other companies.
A registration statement filed with the Securities and Exchange Commission did not specify how many shares would be offered by San Diego-based Nanogen, which plans the private placement with Becton Dickinson & Co., of Franklin Lakes, N.J.; Hoechst AG, of Frankfurt, Germany; and Elan Corp. plc, of Dublin, Ireland.
Becton formed a joint venture with Nanogen earlier this year to develop test systems in the field of in vitro nucleic acid-based diagnostic and monitoring technologies for infectious diseases, using Nanogen's DNA microchip and instrumentation with Becton's system for DNA amplification.
The registration statement does not indicate how much stock Becton will purchase in the $21 million private placement, but deals with Hoechst and Elan include the purchase of aggregates of $10 million and $5 million worth of common stock, respectively.
The collaboration and joint venture entered this month with an affiliate of Hoechst, called Hoechst Corporate Research and Technology, uses Nanogen's microelectronics with Hoechst's Exponential Library by Association of Sublibraries (ELIAS) technology.
When certain milestones are achieved, Nanogen will issue warrants to Hoechst for the purchase of up to 4 percent of common stock, based on the number of shares outstanding on Dec. 5, and exercise prices will be set at fixed premiums to the market price on the issuing date. The warrants will have five-year maximum terms, subject to early expiration if market price goes above the exercise price by a fixed percentage.
The initial term of the research phase of the collaboration is expected to last two years, and funding for the research phase could be terminated by mutual consent after the first year.
With Elan, the pact (also begun this month) is for genomic applications. As milestones are reached over the term of their five-year research program, Elan is expected to provide Nanogen with $11 million in funding, in addition to the stock purchase. In return, Nanogen will develop products for discrimination of sequence variations, such as single nucleotide polymorphisms, allelic variations, genotyping and mutation detection, as well as products for use in expression monitoring of RNA levels.
If any products are developed, Nanogen will pay Elan a royalty on net sales to third parties, and will make its instrument platform available to Elan for beta testing.
New Financings Would Provide Two-Year Cushion
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.)
Comanagers of the IPO are Morgan Stanley & Co., Lehman Brothers Inc. and SBC Warburg Dillon Read Inc., all of New York.
As of Sept. 30, Nanogen had $21.9 million in cash, with a net loss of $7.2 million for the first nine months of 1997. Proceeds from the offering and private placement are expected to provide enough for the company's operations for at least two more years. *