Progenitor Inc., of Columbus, Ohio, and Aviron Inc., of MountainView, Calif., joined the crowded field of biotechnology initial publicoffering (IPO) hopefuls last week, filing registration statements withthe Securities and Exchange Commission to sell a combined total ofabout $66 million in newly issued stock.

Progenitor, a majority-owned subsidiary of Lexington, Mass.-basedInterneuron Pharmaceuticals Inc. and a functional genomicscompany, proposed the sale of 2.5 million shares of common stock atbetween $11 and $13 per share. The IPO was filed just two days afterInterneuron completed a monster $117 million follow-on offering onJune 4, 1996, and comes hard on the heels of a string of successfulmarket debuts for genomics and gene therapy company stocks.

Based on the proposed terms of the offering, Interneuron would ownapproximately 51 percent of Progenitor's outstanding common stockafter the IPO completes (perhaps less if the underwriters'overallotment options are exercised). Currently, Interneuron ownsabout 80 percent of Progenitor while the remaining 20 percent isowned by management, founders and other individuals. Progenitorhad 4.7 million shares outstanding at the time of the IPO filing, afigure that will jump to 7.3 million post-offering. Underwriters forthe offering include Vector Securities International Inc., of Deerfield,Ill.; Tucker Anthony Inc., of New York; and Genesis MerchantGroup Securities, of San Francisco.

Since its inception in February 1992, Progenitor has operated on aline of credit from Interneuron _ as of March 31, 1996, Progenitorhad received approximately $12.5 million. In late 1994, Interneuron'sinvestment was converted from debt to equity and, if the IPOcompletes, the remaining $2 million in debt will automaticallyconvert to equity.

In fiscal 1995 (the year ended Sept. 30, 1995), Progenitor had totalexpenses of $5.7 million and revenues of $2.8 million, producing anet burn rate of $2.9 million. For the first six months of 1996,Progenitor reported $2.5 million in expenses on $912,000 inrevenues for a net loss of $1.5 million.

In 1995, Progenitor signed two deals, each of which could potentiallybe worth $50 million to the fledgling firm. In April, Chiron Corp., ofEmeryville, Calif., entered into a long-term gene therapycollaboration that involves Chiron's use of Progenitor's nonviralvectors in developing gene therapies for cancer, cardiovasculardisorders and infectious diseases. (See BioWorld Today, April 5,1995, p. 1.)

In June 1995, Progenitor signed a co-development deal withZymogenetics Inc., a subsidiary of Bagsvaerd, Denmark-based NovoNordisk A/S, that covers two of Progenitor's blood stem cell growthfactors for the treatment of cancer patients. (See BioWorld Today,June 6, 1995, p. 1.)

Progenitor's functional genomics approach combines developmentalbiology expertise and proprietary technology with gene sequencingand other molecular biology techniques to accelerate the drugdiscovery process. The firm is focused on discovering, characterizingand validating novel genes and receptor proteins as therapeutic leadsand targets.

Progenitor is one of four majority-owned subsidiaries of Interneuron_ the other three are InterNutria Inc., of Lexington, Mass.;Intercardia Inc., of Research Triangle Park, N.C.; and TranscellTechnologies Inc. of Princeton, N.J. Intercardia went public inFebruary of this year at $15.00 per share, grossing $38 million.

Aviron Looks To Advance Vaccine Candidates

Aviron, a vaccine development company formed in April 1992, filedan IPO on June 5, 1996, seeking to sell 3 million shares of commonstock at between $11 and $13 per share. Concurrent with the offering,the company plans to sell 333,333 shares of its stock to South Korea-based Sang-A Pharma Co. Ltd.

As of March 31, 1996, Aviron had $15 million in cash, cashequivalents and short-term investments and approximately 9.3 millionshares of common stock outstanding. If the IPO completes at $12 (themidpoint of the estimated price range), the company will have $51million in its coffers and 12.3 million shares of stock outstanding.

In 1995, Aviron reported a net loss of $11.4 million on revenues of$1.7 million. For the quarter ended March 31, 1996, the net loss was$3.7 million on revenues of $186,000. Focused on the developmentof live virus vaccines, Aviron received its first round of financingfrom venture capitalists in late 1993 _ a total of $15 million. In late1995, the firm raised another $22 million in a private financing froma group of investors led by Sang-A, a subsidiary of the Hanbo Groupin South Korea that specializes in over-the-counter products. (SeeBioWorld Today, Nov. 15, 1995, p. 1.)

Aviron and Sang-A signed an agreement in May 1995 whereby Sang-A was awarded rights to manufacture Aviron's vaccines for marketsin South Korea and elsewhere and to sell the products in SouthKorea. In addition, in December 1995 Aviron entered into a researchcollaboration with SmithKline Beecham Inc., of Philadelphia, todevelop vaccines against Epstein-Barr virus.

Aviron's lead product, a live cold adapted intranasal vaccine forinfluenza, is currently in Phase I/II testing in children. The companyrecently in-licensed a live intranasal vaccine for parainfluenza virustype 3 from the National Institutes of Health. Other vaccines indevelopment are aimed at preventing diseases caused bycytomegalovirus, herpes simplex virus-type 2 and respiratorysyncytial virus. n

-- Lisa Piercey Special to BioWorld Today

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