Despite a dismal second-half 1996 performance by mostbiotechnology stocks, two drug development companies,ChemGenics Pharmaceuticals Inc. and Ilex Oncology Inc., arebraving the market with initial public offerings (IPO) aimed at raisinga combined $60 million.
ChemGenics, of Cambridge, Mass., was formed in May 1996 througha combination of Myco Pharmaceuticals Inc., a Cambridge genomicsfirm, and the drug discovery group at PerSeptive Biosystems Inc.,also of Cambridge.
ChemGenics registered to sell 2.5 million shares in a projected pricerange of $11 to $13. Based on $12 per share, the offering wouldgenerate gross proceeds of $30 million.
As of Sept. 30, the company had $9.35 million in cash and reported anet loss of $10.4 million for the first nine months of this year.
Ilex Oncology, of San Antonio, Texas, was formed three years ago asa spin-off of The Cancer Therapy and Research Foundation of SouthTexas, a non-profit treatment and drug testing center, which owns 30percent of the company.
Ilex registered to sell 2.5 million shares between $11 and $13 pershare. Based on a price of $12, the IPO would generate grossproceeds of $30 million.
As of Sept. 30, Ilex had $17.4 million in cash and reported a net lossof $1.7 million for the first nine months of this year.
Typically the companies whose IPOs attract investor attention arethose with major pharmaceutical company collaborations and drugsin clinical development.
ChemGenics has two partners, American Home Products Corp., ofMadison, N.J., and Pfizer Inc., of New York, while Ilex has ninecancer drugs in clinical development with five in late-stageevaluation.
The 1996 market for biotechnology stocks, both IPOs and follow-onofferings, was awash in money during the first half of the year, butdollars invested slowed to a trickle in the second half. Noting thecyclical nature of biotechnology stock performance, most analystsexpect a rally to begin with the start of the new year.
Ilex's most advanced cancer product is mitoguazone dihydrochloride.The company filed a new drug application with the FDA in Octoberfor clearance of the product as a second-line treatment for AIDS-related non-Hodgkin's lymphoma.
Mitoguazone, first developed in the 1970s, is among a class of anti-cancer compounds designed to kill tumor cells by interfering withpolyamines, which are compounds used by dividing cells to stabilizeDNA. The drug is under development with Sanofi S.A., of Paris.
Ilex has three other cancer drugs, which were licensed frompharmaceutical firms, in Phase III studies.
To offset its drug development expenses, Ilex provides contractresearch organization services to generate revenue.
Underwriters for Ilex's IPO are Salomon Brothers Inc., Cowen & Co.and Smith Barney Inc., all of New York.
ChemGenics in early December signed a potential $70 million drugdiscovery collaboration with American Home Products aimed atfinding new classes of antibiotics based on bacterial gene discoveries.
ChemGenics's alliance with Pfizer, worth up to $50 million, began in1995 with Myco and involves the genetic analysis of fungi to createanti-fungal drugs.
Both American Home Products and Pfizer have equity interests inChemGenics. PerSeptive Biosystems owns 40 percent of thegenomics firm.
ChemGenics, in its approach to drug discovery, applies what it calls"drug discovery genomics" to identify genes essential for organisms'function and "advanced drug selection technologies" to selectcompounds to counter those genes from chemical and natural productlibraries.
Underwriters for ChemGenics' IPO are Cowen & Co., of New York,and Montgomery Securities, of San Francisco. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.