Citing poor market conditions, Myriad Genetics Inc. has withdrawn apublic stock offering that could have given the company up to $43million for the further development of its genetic-based diagnosticsand therapeutics.
Bill Hockett, director of corporate communications at Myriad, toldBioWorld Today that earlier this month, Myriad, based in Salt LakeCity, registered to sell 1.5 million shares at a projected price of$28.50 a share for $42.75 million in gross proceeds. UnderwritersCowen & Co. and UBS Securities LLC, both of New York, hadoptions to purchase another 255,000 shares to cover overallotments.Also, Myriad registered another 200,000 shares to be sold bystockholders in the company.
Following the offering, Myriad was to have 10.2 million sharesoutstanding.
"The market for smallcap companies has deteriorated since wedecided to do the offering," Hockett said, "so we have decided towithdraw the offering completely."
The fact that Myriad stock had dropped from $28.50 a share to $23 ashare (on the day the decision was made to withdraw the offering)was the reason for the decision, Hockett said.
Myriad also has reduced short-term revenue projections for itsgenetic testing service, Matthew Murray, an analyst with LehmanBrothers in New York, said. "The number of projected sales hasdropped from 14,000 to 3,000 in fiscal 1997 and from 32,000 to16,000 in fiscal 1998," he said.
The projections were changed, Murray said, because the companysaid it had only received requests for 500 sample collection vialssince the launch of the BRCAnalysis test on Oct. 30, and that neworders are only being received at the rate of about 100 per week.Previous projections, the company said, were at 2,000 a month.
Murray projects the company will lose $1.08 a share in fiscal 1997,compared to his previous estimate of 20 cents a share in profit.
Reijer Lenstra, an analyst with Smith Barney Shearson in New York,estimated on Dec. 18 that Myriad would lose $.83 per share in 1997and, since that time, he has not changed his estimates. "Since this is anew test, I felt that it would take off slowly; you have to educate thepublic," he said.
Lenstra said the market was "not broad" in the sense that, whilelargecap stocks were booming, smallcap stocks were not doing well.
"Prices for largecap stocks are growing faster than earnings," Lenstrasaid, "at the same time, however, there is no momentum for smallcapstocks. Investors left this market in the summer and haven't comeback."
The company, Hockett said, had originally earmarked the moneyfrom the offering for future development. "We would like to expand,introduce new tests and new sales forces in the new product area,"Hockett said.
"The next product might be in the area of hypertension, where we areworking on a product called HGTAnalysis, which would determinewhich individuals with hypertension would be most likely to respondto a low-salt diet," Hockett said.
Myriad, founded in 1991, is a gene testing company that introducedto the market its first genetic test, BRCAnalysis, in October. Myriadscientists led the teams that discovered the complete sequence of boththe BRCA1 and BRCA2 breast cancer genes
BRCA1 predisposition testing permits identification of those who areat high risk for breast or ovarian cancer.
Myriad's subsidiary, Myriad Labs, is currently formatting acombined BRCA1-BRCA2 test for introduction in 1997. Mutationsin BRCA1 and BRCA2 are believed to be responsible for 90 percentof early onset, hereditary breast cancer and 90 percent of hereditaryovarian cancer.
In addition to marketing genetic tests, Myriad is using its DNAdiscoveries to develop drugs.
The company currently is working with Bayer Corp., of Leverhusen,Germany, a collaboration that represents $71 million in equityinvestments, research funding and potential milestone payments.
Myriad is collaborating also with Ciba Geigy Ltd., of Basel,Switzerland, in a deal that is worth up to $60 million, and with EliLilly & Co., of Indianapolis, which is developing new therapiesbased on Myriad's sequencing and discovery of the BRCA1 breastand ovarian cancer gene. This partnership represents $4 million inequity investments, research funding and potential milestonepayments.
Since Myriad decided to withdraw the public offering, its stock(NASDAQ:MYGN), as of Tuesday, had dropped $1.75 to $21.25.The company currently has $67 million in cash and, as of June 30,1996, a net loss of $5.9 million and revenues of $66 million. n
-- Frances Bishopp
(c) 1997 American Health Consultants. All rights reserved.