Alteon Inc. raised $18 million in a public offering of 2million shares Wednesday, but the company sold 500,000shares less than expected and had to settle for a shareprice that plummeted 35 percent in one month.
In September 1995, Alteon, of Ramsey, N.J., registeredfor an offering of 2.5 million shares and was trading at$14.25. Instead of raising more than $30 million, theoffering was priced at $9 and generated gross proceeds of$18 million.
The company's stock (NASDAQ:ALTN) closedWednesday at $10, down 25 cents.
"We were disappointed with the price," said KennethMoch, Alteon's senior vice president of finance andbusiness development. "But we had a good response fromsome key institutions. We have a number of institutionsthat added to their holdings and new players creating newpositions."
Although Alteon did not generate as much money as ithoped, Moch said the funding will give the company theflexibility "to find the best market window" for its nextventure into the equity markets.
Alteon has two Phase III trials of its lead product,pimagedine, under way and is slated to begin two morePhase II studies with the drug in the fourth quarter of thisyear.
With the current financing, Moch said the company willbe in good financial shape through completion of thePhase II trials in the third quarter of 1996 and will haveenough of a cushion to be selective in seeking additionalfinancing.
Pimagedine is a compound designed to inhibit advancedglycosylation end-products (AGE), whose accumulationcan result in damage to organs, blood vessels and nerves.Over-production of AGEs is tied to elevated glucoselevels, such as those found in diabetics.
In the two Phase III studies, pimagedine is being tested asa treatment for advanced kidney disease associated withType I and Type II diabetes. More than 1,500 patients at125 medical centers in the U.S. and Canada are expectedto participate in the trials.
The two Phase II trials will evaluate pimagedine fordiabetes-related end-stage renal disease and dyslipidemia,a condition that affects coronary artery disorders.
Alteon is developing pimagedine in a collaboration withGermany-based Hoechst Marion Roussel.
The public offering was managed by Robertson, Stephens& Co. L.P. and Montgomery Securities, both of SanFrancisco, and Lehman Brothers Inc., of New York. Theunderwriters have an option to purchase 300,000 sharesto cover overallotments. Alteon has about 15 millionshares outstanding. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.