With biotechnology stocks slumping along with the rest of themarket, Aviron Inc., a vaccine development company, postponed itsinitial public offering (IPO) of three million shares.

The Mountain View, Calif., company, which registered for the IPOJune 5, 1996, apparently fell victim to what some analysts havedescribed as indigestion in a market that gobbled up $3 billion inequity financings, both follow-on offerings and IPOs, during the firsthalf of this year and a record $5.2 billion over the last year.

Aviron is trying to raise about $36 million in an IPO projected in aprice range from $11 to $13 per share. Underwriters are Robertson,Stephens & Co., of San Francisco.

Although the IPO market in biotechnology stocks may not be asfrenzied as it was five months ago, "overall it doesn't look that bad,"said Fariba Ghodsian, an analyst with Wedbush Morgan Securities, inLos Angeles. "Companies may take a cut in valuation, but they canget the IPO done."

Two weeks ago, Cadus Pharmaceuticals Inc., of Tarrytown, N.Y.,priced its $19 million IPO during one of the most volatile tradingdays since the October 1987 market crash. (See BioWorld Today,July 19, 1996, p. 1.)

Cadus' offering was completed at a price of $7 per share, below theexpected range of $10.50 to $12.50. The company's stock(NASDAQ:KDUS) closed Thursday at $7.

Ghodsian said companies have to work harder to get their IPO donein the current market. Earlier this year, she observed, "all you had todo was send out a prospectus."

In addition to the general market downturn, Ghodsian blamed somelack of investor interest on "the summer effect." Fund managers, shesaid, do not feel the same urgency to invest that accompaniedofferings in the summer of 1995 when the financing "window" firstopened on this past, record-setting year.

"Fund managers have done so many deals," she said, "they don'twant to look at any more."

Progenitor Inc., of Columbus, Ohio, also registered for its IPO inearly June, but has yet to price it. (See BioWorld Today, June 12,1996, p. 1.)

Progenitor, a functional genomics company, is a majority-ownedsubsidiary of Interneuron Pharmaceuticals Inc., of Lexington, Mass.,and is trying to raise about $30 million in an offering of 2.5 millionshares.

Other pending IPOs fighting against the market slump are those ofGeron Corp., of Menlo Park, Calif.; Cubist Pharmaceuticals Inc., ofCambridge, Mass.; and Ingenex Inc., of Menlo Park, Calif.

Aviron, as of March 31, 1996, had $15 million in cash and reported anet loss of $3.7 million for the first three months of the year. During1995 the company lost $11.4 million.

Aviron's lead product is an influenza vaccine derived from a cold-adapted, modified living virus that triggers antibodies to the diseasein nasal passages as well as the blood stream. The virus has beenaltered to make it non-virulent and the vaccine is administeredthrough a nasal spray.

Current influenza vaccines, which are administered by injection, aremade from killed viruses and stimulate antibodies in the blood.

Aviron's vaccine is in Phase I/II testing in children. The company hasa collaboration with South Korean drug maker Sang-A, a subsidiaryof the Hanbo Group in Seoul, to manufacture the product and sell itin Korea.

Aviron also has a collaboration with London-based SmithKlineBeecham plc for vaccines against Epstein-Barr virus, which causesinfectious mononucleosis.

Other vaccines under development by Aviron target cytomegalovirus,herpes simplex virus and respiratory syncytial virus. n

-- Charles Craig

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

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