Oncor Inc. completed a $10 million private placement consisting ofstock and three-year convertible notes.
The financing leaves the company that develops gene-based testsystems with about $16 million in cash and equivalents, which shouldlast at least a year. The financing, with unnamed institutions, wascompleted nearly a month after an FDA advisory panel recommendedagainst Oncor's HER-2/neu breast cancer diagnostic.
Oncor, of Gaithersburg, Md., now has about 21.7 million sharesoutstanding. That doesn't include the convertible notes. The shares tobe issued will be determined by the future price of the stock.
In the transaction Oncor sold 768,384 shares for $3 million, equatingto a per-share price of $3.90. The remainder of the financinginvolved $7 million in 4.5 percent three-year convertible unsecurednotes.
The notes become effective in three equal tranches at 15, 35 and 65days after the effectiveness of the registration statement. They can beconverted at 80.5 percent of the stock price at the time of conversion.The note holders can convert at any time, and the company can forcethe shares to be converted any time after the specified time periodfollowing effectiveness of the registration, said John Coker, vicepresident and chief financial officer for Oncor.
Oncor announced the completion of the financing late Thursday. Itsstock (AMEX:ONC) fell 63 cents, or nearly 13 percent, Friday toclose at $4.25.
Oncor has positions in OncorPharm Inc., a subsidiary formed lastApril to apply human genome information to the development ofdrugs for site-directed repair of human genes; and OncorMed Inc.,which uses similar technology for the early detection of cancer andother genetic diseases.
Oncor holds about 54 percent of OncorPharm, which intends tocreate drug candidates, do certain preclinical work and then findcorporate partners for clinical development and marketing. "It is ourintention going forward that OncorPharm be self-funding," Cokersaid.
Oncor owns about 40 percent of OncorMed. But that stake isexpected to be less than 30 percent after completion of a secondaryoffering, which now is under registration.
Coker said Oncor will use the money to further pursue diagnosticopportunities, including the breast cancer test, and lung and bladdercancer tests based upon work that came out of Johns HopkinsUniversity in Baltimore. (See BioWorld Today, Oct. 13, 1994, p. 2.)
Oncor will continue working with the FDA, Coker said, to addressconcerns the agency has about the breast cancer test. The advisorypanel said further data are needed.
Coker said Oncor would hope to have the breast cancer test on theU.S. market in 1996 as well as a leukemia diagnostic, for which anapplication was filed more than a year ago. The HER-2/neu breastcancer test, used for node-negative breast cancers, already is on themarket in some European countries, Australia and Canada. Cokersaid the financing will help Oncor develop those markets.
Approval of the breast cancer test and acceptance by the medicalcommunity would add significantly to Oncor's revenues. Thecompany had about $12.5 million in revenues through the first ninemonths of 1995. Oncor said about 70 percent of the 180,000 newcases of breast cancer diagnosed each year in the U.S. are node-negative. Oncor would net about $100 from each test sold, Cokersaid. n
-- Jim Shrine
(c) 1997 American Health Consultants. All rights reserved.