Centocor Inc., in a move aimed at wiping out about half of a morethan $200 million debt due in five years, held a public offering of 3.5million shares that was priced at $33 per share for gross proceeds of$115 million.
The Malvern, Pa.-based company registered for the public offering inJanuary 1996, taking advantage of a more than 110 percent surge inits stock in a month. The dramatic increase followed release inDecember 1995 of positive data from two Phase III trials supportingexpanded use of Centocor's marketed anti-blood clotting drug,ReoPro.
The $33 price of the offering is $3 higher than the trading price ofCentocor's stock (NASDAQ:CNTO) when the equity financing wasproposed Jan. 22, 1996. The company's shares ended Tuesday at$34.62, down 75 cents.
Centocor officials said they will use the proceeds to retire more than$106.6 million in principal from a 1991 sale of convertiblesubordinated notes, which carry a 7.25 percent annual interest rate.Redeeming the notes early will save Centocor about $7.7 million ininterest payments each year.
Holders of the notes can return them for 103 percent of the principalor convert them to stock at $28.64 per share. With Centocor's sharestrading higher than the conversion rate, the company expects somebond holders will take stock instead of cash.
Funds not paid out to retire the notes may be used to help pay off theother half of Centocor's debt. The company sold $125 million inconvertible notes to European investors. That debt also is due in 2001and the stock conversion price is $61 per share.
ReoPro is a monoclonal antibody aimed at inhibiting plateletaggregation, which causes blood clots. The drug was approved in theU.S. and Europe in December 1994 for prevention of adverse cardiacevents in patients at high risk of artery reclosure followingangioplasty. Those patients account for 30 percent of the total whoundergo the procedure.
The two large-scale studies completed in December 1995 supportexpansion of the drug's use to all angioplasty patients, who numberabout 700,000 a year in the U.S. and Europe. The recent trials alsocountered concerns about bleeding side effects previously associatedwith ReoPro, which is marketed by Centocor's partner, Eli Lilly andCo., of Indianapolis.
Centocor ended 1995 with revenues of $78.9 million, a net loss of$57.1 million and $131 million in cash. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.