AFFYMETRIX RAKES IN $90M: DOUBLE WHAT WASEXPECTED

By Charles Craig

Affymetrix Inc., cashing in on Wall Street's enthusiasm for genomicscompanies, generated 50 percent more funding than projected in itsinitial public offering (IPO) of six million shares, which totaled onemillion more than expected. And it was the biggest cash haul for abiotech IPO since 1992.

The Santa Clara, Calif., company, which developed a GeneChipsystem for quick analysis of DNA sequences for genetic testing andgene discovery, raised gross proceeds of $90 million after its IPOwas priced at $15 per share. The total equity financing could jump to$103.5 million if underwriters exercise their overallotment options topurchase another 900,000 shares.

The last biotech IPO that raised this much cash was Gilead SciencesInc.'s, which brought in $86.3 million in January 1992. (For more onthe success of biotech's latest crop of IPOs, see Monday's BioWorldFinancial Watch.)

The IPO was managed by Robertson, Stephens & Co., CS FirstBoston Corp. and Montgomery Securities, all of New York.

Demand not only pushed the number of shares in the IPO higher, butalso boosted the price beyond the projected range. When Affymetrixregistered for the offering in April, the company intended to sell fivemillion shares and expected a price range of between $11 and $13.

The stock (NASDAQ:AFFX) debuted Thursday and closed at$17.37, which was 16 percent more than the IPO price. Following theoffering, Affymetrix has 22.2 million shares outstanding.

The company's biggest stockholder is London-based GlaxoWellcome plc, which owned 46 percent of Affymetrix prior to theoffering. Glaxo acquired its stake in Affymetrix last year when thepharmaceutical firm purchased Affymax N.V., of Amsterdam, theNetherlands. Affymax, a combinatorial chemistry company, startedAffymetrix in 1991 and launched it as a subsidiary two years later.

Affymetrix ended 1995 with $39 million in cash and reported a netloss for the year of $10.7 million. The company is commercializingits GeneChip system as a tool for identifying genes and theirfunctions and for detecting genetic mutations linked to diseases.

The technology involves synthesizing from 16,000 to 100,000different DNA strands on a chip 1.2 centimeters square. Unknownpieces of DNA, labeled with a fluorescent tag, then are placed on thechip. Their sequences are revealed after they bind to the knownstrands that are complementary.

In its first application of the GeneChip, Affymetrix earlier this yearcontracted with research centers and pharmaceutical firms to identifyHIV mutations that help HIV resist antiviral drugs, such as AZT,which is sold by Glaxo Wellcome. n

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