By Debbie Strickland
Genzyme Molecular Oncology (GMO), a division of Genzyme Corp., raised $20 million through a private placement to help fund operations and research until an initial public offering is completed. Like Genzyme and its other unit, Genzyme Tissue Repair, GMO will have its own publicly traded tracking stock.
GMO is pursuing cancer therapies through genomics, gene therapy, gene diagnostics and combinatorial chemistry.
The placement with institutional investors is in the form of 6 percent convertible debentures due in 2002. The debentures will be convertible into discounted shares of GMO common stock. The discount will start at 7 percent (93 percent of the market price) six months from the issue and will increase to 15 percent (85 percent of the market price) at 15 months after issue. After 15 months, the conversion price will be either 85 percent of the market price at 15 months or 85 percent of the market price at the time of conversion, whichever is less.
Credit Suisse First Boston Corp., of New York, acted as placement agent.
Genzyme Corp., of Cambridge, Mass., created the Genzyme Molecular Oncology (GMO) division after the acquisition earlier this year of Allendale, N.J.-based PharmaGenics Inc., in a transaction valued at $28 million. Genzyme shareholders own 60 percent of GMO, and former PharmaGenics investors own the remaining 40 percent.
The division in April filed with the Securities and Exchange Commission a registration statement for an initial public offering totaling $35 million, which has yet to be completed. The division has applied for a spot on the NASDAQ National Market under the symbol GZMO.
The division's key technology is serial analysis of gene expression (SAGE), a high-throughput, high-efficiency method of simultaneously measuring levels of gene expression. Using SAGE, developed by PharmaGenics, it is possible to determine which genes are expressed at a given time in a given cell.
This technology has potential applications in the development of diagnostics and the isolation of therapeutic targets. GMO is using SAGE internally and marketing the service to other companies.
The division's product pipeline contains two active clinical gene therapy programs for melanoma, plus internal research and preclinical programs in the areas of immunotherapy, cytotoxic genes and tumor suppressor genes such as p53. *