Two companies that set out to raise money in the down market gottheir deals done, but raised substantially less than originallyanticipated.

Geron Corp., of Menlo Park, Calif., completed an initial publicoffering (IPO) of 2 million shares at $8 apiece for gross proceeds of$16 million. The company had proposed the sale of 2.5 millionshares at $11 to $13 each. And Genzyme Transgenics Corp., ofFramingham, Mass., priced an offering of 3 million shares at $4 each,even though the stock was trading at $7.50 six weeks ago when itregistered to sell the shares.

"We're proud the company was able to break through in thisenvironment," said Geron President and CEO Ron Eastman. He saidGeron thought of pulling the offering, "but decided to continuebecause of the number and quality of investors who had an interest inthe company. "And," he said, "one could not predict what the futurewould bring. Geron felt it was more prudent to continue."

Geron collaborator Kyowa Hakko Kogyo Co. Ltd., of Japan, investedan additional $2.5 million through the purchase of 312,500 shares atthe IPO price, bringing total gross proceeds to $18.5 million.

Geron is working on discovering and developing products based onthe common biological mechanisms underlying cancer and other age-related diseases. The company focuses on telomeres, the structures atthe end of chromosomes that appear to act as a molecular clock ofcellular aging, and telomerase, an enzyme that seems to stop theclock and lead to cellular immortality.

Geron has programs in telomerase inhibition and detection, cellsenescence modulation and primordial stem cells for cellulartransplantation. All are in the discovery phase. (See BioWorldToday, June 17, 1996, p. 1.)

In May 1995 Kyowa Hakko agreed to pay Geron up to $30 millionfor rights in Asia to drugs for inducing cell death in tumor cells.While specific details were not disclosed the deal largely entailed up-front payments and research support over four years, Eastman said.Kyowa Hakko also will fund all trials in Asia.

On March 31, 1996, Geron had $13.9 million in cash. It now hasabout 10 million shares outstanding. J.P. Morgan & Co., of NewYork, was lead underwriter. Montgomery Securities, of SanFrancisco, and Salomon Brothers Inc., of New York, were co-managers. They have an option to purchase another 300,000 shares.The stock (NASDAQ:GERN) was at $7.37 Thursday.

Eastman said proceeds from the offering allow Geron to remainflexible. "We had sought to attract higher proceeds," he said, "butwith the market conditions we're pleased with the outcome."

Genzyme Transgenics, too, decided it was better to go ahead with theoffering despite the reduced price.

"We feel it's well below the valuation of the company," said MarcieFerguson, a Genzyme corporate communications assistant. Still, sheadded, "there's no guarantee the market would be any different inthree months."

Genzyme Corp., of Cambridge, Mass., agreed to purchase 900,000shares in the offering, giving it nearly 45 percent of GenzymeTransgenics' 16.2 million outstanding shares. Genzyme's stake wasabout 48 percent.

Genzyme Transgenics on June 30, 1996, had $1.3 million in cash,with a net loss for the quarter of $2.2 million. The company hadsecond-quarter revenues of $11.4 million, all but $2 million of itcoming from its testing services division. Its stock(NASDAQ:GZTC) was up 81 cents Thursday to $4.87.

Later this year Genzyme Transgenics plans to begin the first U.S.trial of a human protein produced in the milk of transgenic goats. Theproduct is antithrombin III, an anti-blood clotting agent. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.