By Frances Bishopp
Progenitor Inc. and Aurora Biosciences Corp. filed for initial public offerings (IPO) that could generate a combined total of approximately $60 million.
Progenitor, a majority-owned subsidiary of Interneuron Pharmaceuticals Inc., of Lexington, Mass., will offer 2.75 million shares of Progenitor common stock at a price the company anticipates will be between $10 and $12 per share. At the midway price of $11 per share, Progenitor could raise approximately $30.25 million.
The proposed IPO is the second effort for Progenitor, which in August 1996 postponed its first offering, filed three months before.
Aurora Biosciences, of La Jolla, Calif., will offer 3 million shares at an estimated price between $9 and $11. At $10 per share, Aurora could raise approximately $30 million.
Progenitor granted underwriters Lehman Brothers, of New York, and Genesis Merchant Group, of San Francisco, options to purchase 412,500 additional shares to cover over-allotments.
Aurora's underwriters, Alex Brown & Sons Inc., of Baltimore, and Hambrecht & Quist LLC and Robertson, Stephens & Co., both of New York, have options to purchase 450,000 shares for over-allotments.
Progenitor Practicing Functional Genomics
Progenitor is engaged in the discovery and functional characterization of genes to identify targets for the development of new pharmaceuticals. The initial focus is on genes important in blood and immune system cell development, blood vessel development, bone formation, asthma and schizophrenia.
Poor market conditions were the reason for Progenitor's decision to postpone its original IPO, combined with the fact that Progenitor, of Columbus, Ohio, could afford to wait because of financial backing from its parent company, Interneuron. (See BioWorld Today, Sept. 3, 1996, p.1.)
Since it was formed in 1992, Progenitor has operated on a line of credit from Interneuron, which completed a $117 million follow-on offering in August 1996, two days after Progenitor filed its original IPO.
Concurrently with the closing of the IPO, Progenitor will sell to Amgen Inc., of Thousand Oaks, Calif., an additional $5.5 million of Progenitor common stock at the IPO price. In January 1997, Progenitor licensed its leptin receptor technology to Amgen in a deal that could earn Progenitor $42 million in licensing fees, stock purchases and milestone payments. (See BioWorld Today, Feb. 19, 1997, p.1.)
Details of the agreement called for Amgen to pay a $500,000 licensing fee to Progenitor with the provision that Amgen could also purchase $5.5 million of Progenitor common stock should the company go public.
Progenitor discovered the leptin receptor while searching for genes that influence the development of hematopoietic cells, such as stem cells. The company plans to develop the leptin receptor as a potential way to isolate stem cells from blood.
Progenitor also filed a registration statement with the Securities and Exchange Commission relating to the proposed acquisition of Mercator Genetics Inc., of Menlo Park, Calif., which Progenitor agreed to buy in February 1997 in a deal valued at approximately $30 million.
The merger agreement, designed to bring together Progenitor's functional genomics capabilities and Mercator's human disease gene discovery techniques, gave Progenitor a takeover option to be exercised simultaneously with the completion of the IPO. Shareholders in Mercator will receive $22 million worth of Progenitor common stock. The number of shares will be determined by the IPO share price. At an estimated $10 per share, Mercator shareholders would receive 2.2 million shares.
Progenitor also agreed to assume about $8 million in Mercator liabilities. Prior to the IPO, Mercator received a $6.6 million line of credit from Interneuron to support Mercator's gene discovery efforts. Following the public offering, Progenitor will assume responsibility for Interneuron's loan.
Following the IPO and completion of the Mercator acquisition, Interneuron, which has three other subsidiaries, will own approximately 43 percent of Progenitor's outstanding common stock.
Progenitor has two other partnerships worth a combined $100 million. It is collaborating with Chiron Corp., of Emeryville, Calif., for gene therapies targeting cancer, cardiovascular disorders and infectious diseases and with ZymoGenetics Inc., of Seattle, for development of two blood cell growth factors involved in restoring bone marrow depleted by cancer chemotherapy and radiation treatments.
As of Dec. 31, 1996, Progenitor had $197,000 in cash. Its net loss for the fiscal year ending Sept. 30, 1996, was $5.5 million.
Aurora's Expertise In Screening
A year ago, Aurora, which focuses on mammalian cell-based screening for new therapeutics, raised $13.3 million in a private financing.
In December 1996, Aurora signed a potential $40 million deal with Bristol-Myers Squibb Co., of New York, which gave Bristol-Myers the rights to Aurora's fluorescent screening technology and provided for a collaboration on the development of specific screening assays and on Aurora's proprietary Ultra-High Throughput Screening System.
In September 1996, Aurora teamed up with ArQule Inc., of Medford, Mass., to search for drug leads using Aurora's screening technologies with ArQule's small molecules. Neither company paid for the collaboration and no equity was exchanged.
Aurora has an agreement with Alanex Corp., of San Diego, which provides Aurora with non-exclusive access to certain combinatorial chemistry libraries.
Aurora also has collaborations with Sequana Therapeutics Inc., of La Jolla, Allelix Biopharmaceuticals Inc., of Canada, and Roche Bioscience, of Palo Alto, Calif.
As of Dec. 31, 1996, Aurora had $13.2 million in cash and a net loss of almost $3 million for the year.
Interneuron's stock (NASDAQ:IPIC) closed Monday at $18.25, down $2.00. *