By Debbie Strickland
An eight-year-old biotech firm that aims to fight infectious pathogens by shutting down key steps in the protein assembly line is seeking $25.3 million in an initial public offering (IPO).
RiboGene Inc., of Hayward, Calif., registered with the Securities and Exchange Commission to sell 2.3 million shares at between $10 and $12 per share. The assumed price is $11 per share.
The offering would raise the number of shares outstanding to 6.8 million. The company has requested a listing on the Nasdaq National Market exchange under the symbol "RIBO."
The underwriters — EVEREN Securities Inc., of Chicago;,Gruntal & Co. L.L.C., of New York, and Cruttendon Roth Inc., of Irvine, Calif.— have an overallotment option for an additional 345,000 shares.
Net proceeds are estimated at $22.8 million, or $26.3 million if the underwriters' overallotment option is exercised in full.
If successful, the offering would increase by roughly ninefold RiboGene's cash and cash equivalents, and provide for operations through 1999. As of June 30, the company had $3.3 million in cash and equivalents, following a first-half net loss of $1.3 million.
In addition to providing working capital, proceeds will be used to expand chemistry capabilities, relocate to a new facility and repay secured debt of $1.6 million.
One investor already has pledged participation in the IPO: Abbott Laboratories, of Abbott Park, Ill., agreed to buy $4 million worth of the new shares as part of a collaboration agreement inked in April 1996.
The registration statement revealed previously undisclosed terms of the Abbott-RiboGene antifungal collaboration, now at the lead optimization stage. The agreement calls for Abbott to provide research and development funding of $5 million, an up-front private equity investment of $3.5 million (in addition to the $4 million IPO buy), and milestones of $9 million for each product developed through the collaboration. RiboGene also will receive royalties on any commercialized products.
The company also has received almost $1 million in Small Business Innovation grant funding from the National Institutes of Health to support antifungal assay development for use in the Abbott collaboration research.
RiboGene this week signed on a new corporate collaborator, Pharmacopeia Inc., of Princeton, N.J. RiboGene will screen Pharmacopeia's small-molecule combinatorial chemistry libraries to identify drugs for two undisclosed pathogens. The companies will share ownership rights to any lead compounds.
RiboGene has similar deals with ArQule, Inc., of Medford, Mass., and Trega Biosciences Inc. (formerly Houghten Pharmaceuticals), of San Diego.
RiboGene's research and development efforts are centered on one approach to fighting bacteria, fungi and viruses: discovery of anti-infective compounds that inhibit pathogen specific translation mechanisms (PSTM).
Two Hepatitis Targets Under Study
Translation is the second of two main steps in cellular protein production. The first is transcription, during which the genetic instructions for making proteins are copied from DNA to produce messenger RNA in the cell's nucleus. In the translation process, which occurs in the cytoplasm, amino acids are assembled into proteins according to sequences specified by messenger RNA.
The antiviral program has found two targets associated with the hepatitis C virus (HCV). The more advanced, with screening for lead compounds under way, is the HCV internal ribosome entry site (IRES), which is a special structure within the virus that enables it to manipulate a human cell's translation process. Viruses with defective IRES elements replicate poorly, so IRES-damaging compounds could stop infection from progressing.
The second target, now at the assay development stage, centers on the interaction between an HCV viral protein NS5A, (non-structural 5A), and a human protein kinase, RNA-activated enzyme (PKR). The viral protein appears to stop the action of PKR, a natural antiviral defense that regulates protein synthesis in infected cells, thereby preventing the production of new viruses. HCV is one of many viruses that have developed resistance to PKR. A drug that protects PKR against viral defense mechanisms could enable the human enzyme to exert its natural anti-HCV effect.
In its antibacterial program, RiboGene likewise has identified two enzyme targets, deformylase and ppGpp (guanosine tetraphosphate) degradase. Both are at the lead discovery stage.
In a process essential to bacterial growth, the enzyme deformylase removes the formyl group from methionine, releasing the protein. The second enzyme under study, ppGpp degradase, regulates a nucleotide that is toxic to bacteria.
Inhibitors of either enzyme could serve as bacterial assassins.
RiboGene's drug discovery process goes from target identification and assay development to lead discovery and optimization. The company currently has no drugs in clinical trials, though in the mid-1990s, two intranasal products — one for nausea related to cancer therapies and one for migraine headaches — reached the late clinical stage.
An NDA was expected in 1995 for Emitasol, the nausea drug, but in 1996 RiboGene discontinued development of all intranasal compounds. *