Genzyme Corp.'s stock price stabilized in time forcompany officials to go ahead with a 2.5 million-sharepublic offering, which was declared effective Friday andgrossed $128 million.
The stock sold at $51.25 per share, lower than the $60trading price it reached when Genzyme proposed theoffering on Sept. 13, 1995, but nearly twice as high as itwas trading at to start the year. The offering was managedby the New York firms CS First Boston, Cowen & Co.,Lehman Brothers Inc. and PaineWebber Inc.
The drop in the company's stock price nearly causedGenzyme to postpone the offering until the end of themonth, when third-quarter results would be out and thefirst data would be made public from the HAL line ofadhesion control products, said Stephen Push, thecompany's vice president for corporate communications.
"The [financing] window was starting to close, and ourstock had come down a bit over the past month or so,"Push said. "We were concerned when it was down to $50and $49, but it stabilized and came back up and wedecided to go with it at $51.25. We're satisfied with thatprice."
Genzyme stock (NASDAQ:GENZ) gained 88 centsFriday to close at $52.63.
Genzyme, of Cambridge, Mass., reported having $86.4million in cash and 26.7 million shares outstanding onJune 30. Some of the proceeds from the offering areexpected to be used for the launch of Seprafilm andSepracoat, the first two HAL products, which are madefrom hyaluronic acid and used to reduce postoperativeadhesions.
The company said it intends to file premarket approvalapplications this year for both products. But outside ofsaying statistically significant results were achieved in allthree completed pivotal HAL trials, company officials arenot releasing specific trial data.
Some analysts have expressed concern about that,particularly while an offering was pending.
"It's amazing a deal was done without anyone seeing thedata," one analyst, who requested anonymity, said Friday."It's a trend you have to be uncomfortable with _offerings for such large sums of money with no data."While Genzyme has a number of other programs and hasgood earnings of late, the analyst said "there's lot ofhyaluronic acid in that [stock] price."
Edmund Debler, an analyst with New York-based Mehtaand Isaly, said the fact that NeXstar Pharmaceuticals Inc.,of Boulder, Colo., withdrew its proposed offering onThursday, and Genzyme's sold at nearly $10 less thanwhen it registered, showed the financing opportunity isnarrowing.
But, Debler said, Genzyme did it at a good time _ after astring of positive news this year _ and at a good price.He said Mehta and Isaly still believes the stock is"relatively expensive," and wants to see the HAL databefore committing further.
Genzyme has said all along that it wanted to hold onto theHAL data so it could be presented at proper scientificforums and in peer-reviewed journals. "To accomplishthat we can't disseminate the data prematurely," Pushsaid.
The first HAL data will be presented Oct. 24, 1995, inNew Orleans at the American College of Surgeonsmeeting. Those results will deal with Seprafilm used inabdominal surgeries. Trials of Seprafilm and anotherproduct, Sepracoat, already are completed for use ingynecologic surgeries.
Push said some of the expenses Genzyme faces in thecoming year are related to the launch of the HALproducts, and the possible repurchase of programs spunoff with separate financing vehicles: Neozyme II Corp.,which is developing cystic fibrosis therapies, andGenzyme Development Partners L.P., which has certainroyalty rights for HAL products. n
-- Jim Shrine
(c) 1997 American Health Consultants. All rights reserved.