Centocor Inc., buoyed by recent Phase III clinical trial results tosupport expanded use of its anti-blood clotting drug, ReoPro,registered Monday to sell 3.5 million shares in a public offeringaimed at retiring a substantial portion of the company's debt.
Based on the $30 closing price Monday of Centocor's shares(NASDAQ:CNTO), the Malvern, Pa.-based firm would raise $105million from the stock sale.
Company officials said they intend to use the proceeds to retire morethan $106.6 million in principal from a 1991 sale of convertiblesubordinated notes, which carry a 7.25 percent annual interest rateand are due five years from now in February 2001.
Holders of the notes will be able to redeem them for 103 percent ofthe principal or convert them to Centocor stock at $28.64 per share.With the trading price of the company's shares expected to exceedthe conversion rate, Centocor anticipates some note holders will takestock instead of cash.
If Centocor redeems all the notes it would cost the company about$110 million. If all the holders convert to shares, they would total 3.8million.
In retiring the notes early Centocor saves about $7.7 million ininterest payments per year and cuts almost in half the amount of debtdue in 2001. The company has an additional $125 million inprincipal outstanding from a European sale of convertiblesubordinated notes. The conversion price of those notes is $61 pershare.
In registering for the public offering, Centocor is taking advantage ofa more than 111 percent surge in its stock price since Dec. 15, 1995.The shares skyrocketed 68 percent in one day on Centocor'sannouncement that a large-scale Phase III study of ReoPro was beingstopped because the drug proved its effectiveness in preventing deathand heart attacks after 1,500 of the scheduled 4,800 angioplastypatients were enrolled in the trial.
Less than a week later, on Dec. 20, 1995, another large-scale PhaseIII trial was halted after ReoPro met its primary endpoints before allthe patients were enrolled. In that study, ReoPro demonstrated notonly that it reduced death and heart attacks within 30 days ofangioplasty, but also that it was effective in stabilizing refractoryunstable angina patients 24 hours before they underwent the surgicalprocedure.
Analysts said the two studies, which also countered concerns aboutbleeding problems associated with ReoPro, supported broadening thedrug's label for potential use with all angioplasties. More than700,000 procedures are performed each year in the U.S. and Europe.
ReoPro is a monoclonal antibody aimed at inhibiting plateletaggregation, which causes blood clots. The drug was approved inDecember 1994 in the U.S. and Europe for prevention of adversecardiac events in patients at high risk of artery reclosure followingangioplasty. Those patients account for about 30 percent of the totalnumber who undergo the procedure.
ReoPro is marketed by Centocor's partner, Eli Lilly and Co., ofIndianapolis. Centocor's stock remained low during most of 1995because sales of the drug were much slower than expected. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.