By Frances Bishopp
Protein Design Labs Inc. registered with the Securities & Exchange Commission (SEC) to sell 2 million shares through a public offering expected to raise nearly $70 million.
The Mountain View, Calif., company is offering 2 million shares and Corange International Ltd., of Bermuda, is selling another 750,000 shares in conjunction with the offering.
Underwriters are Oppenheimer & Co. Inc., Lehman Brothers and PaineWebber Inc., all of New York. They have options to purchase 412,500 additional shares to cover overallotments.
Based on the $34 closing price of Protein Design's stock (NASDAQ:PDLI) Monday, the offering would generate $68 million. Adding proceeds from overallotment options would boost the total to $82 million. Protein Design's shares ended Monday down $1.
Corange International, the parent company of Boehringer Mannheim GmbH, of Germany, owns approximately 14 percent of Protein Design and is a collaborative partner in the development of four products: anti-hepatitis B antibody, anti-L-Selectin antibody, Protovir human anti-cytomegalovirus antibody and a fourth unnamed product in the cardiovascular field.
Corange's 750,000 shares represent 31 percent of the 2.4 million Protein Design shares it owns, Fred Kurland, vice president and chief financial officer of Protein Design, told BioWorld Today. "They are selling pursuant to our agreement of long standing, which anticipated at some point they might sell stock through an offering rather than the open market.
"We are quite pleased that they are selling in an underwritten offering," Kurland added. "We feel it is very orderly and everybody gets the appropriate notice. We are not trying to hide anything. It is a perfectly rational move on Corange's part. Corange has signed a one-year lock on its remaining Protein Design shares and we feel its actions have demonstrated a great deal of confidence in our mutual collaboration."
Kurland said the company plans to use the proceeds of its public offering to fund new research projects such as microbial pathogenesis, research that could lead to a new generation of antibiotics.
Proceeds also are earmarked for expansion of Protein Design's facilities at its headquarters in Mountain View and its manufacturing plant in Plymouth, Minn.
This public offering, Kurland said, is the first time Protein Design has been out to the market since the company went public in 1992.
"Our president said we wouldn't be back until we had a product that was close to market," Kurland added. "We kept our promise because Roche [Holding Ltd.] has told us that they intend to file a product license application for Zenapax in the first half of this year."
Roche, of Basel, Switzerland, has a worldwide license to Protein Design's Zenapax, a drug being developed for kidney transplant rejection.
Protein Design's other products include Protovir, which is being studied for prevention of cytomegalovirus (CMV) infections in bone marrow transplantation and treatment of CMV retinitis in AIDS patients. The company's Smart M195 antibody is in clinical trials for treatment of myeloid leukemia.
In addition, Boehringer Mannheim recently began a Phase II trial using Protein Design's human anti-hepatitis B antibody in the U.S. and Europe. A Phase II/III trial for the product in liver transplants is expected to get under way in the first half of this year. Boehringer also will start a clinical program in Asia for the hepatitis B treatment.
Boehringer is constructing a $170 million multiple-product manufacturing facility in Penzburg, Germany, Kurland said, to produce the anti-hepatitis B and the Smart anti-L-Selectin antibodies.
"When you think about how much money they will get out of the deal by selling their 750,000 shares," Kurland said, "between the cost of the clinical trials and the manufacturing facility, they are putting more into this than they are taking out."
In December 1996, Protein Design was issued a patent that covers most humanized monoclonal antibodies.
As of Dec. 31, 1996, Protein Design had $99.7 million in cash. Its burn rate during 1996 was $7.4 million. *