Agouron Pharmaceuticals Inc.'s public offering of 3million shares was priced at $28 apiece, meaning thecompany will gross $84 million from the offering.Delivery is scheduled for next Wednesday.
Agouron, of La Jolla, Calif., will net $80 million from theoffering, pending the exercisement of overallotmentoptions. With the $20 million it had at the end of June,the $24 million non-equity milestone payment it got lastmonth from a corporate partner, and the proceeds of theoffering, Agouron is positioned financially to reachprofitability, an analyst said.
Agouron's filing on Aug. 4, 1995 proposed the sale of 2million shares. Its stock (NASDAQ:AGPH) closed thatday at $26.65. It closed at $37.25 on Aug. 24, 1995 whenthe company got $24 million from Tokyo-based JapanTobacco Inc. as a result of the decision to take Agouron'sprotease inhibitor, AG1343, into Phase II/III studies.
The end result was that 1 million shares were added to theoffering but the selling price was 25 percent less than thestock traded at after Japan Tobacco's milestone payment.Agouron will have about 10.3 million shares outstandingwhen the deal closes and up to 13 million on a fullydiluted basis.
The stock closed at $28 Friday, down $2 over the pasttwo days, but still up significantly this year.
Ed Hurwitz, a biotechnology analyst with the co-managerof the underwriting, Robertson, Stephens & Co., saidthere was "enormous demand" in the offering. "As theroad show went around, investors embraced the story andrecognized the progress and prospects for the company,"he said. "But at the same time they were very pricesensitive.
"You saw massive investor interest at a reasonable price,"Hurwitz told BioWorld Today. "The company wassatisfied with raising money at those levels. There's avery healthy financing market out there, but there still isrational thinking with respect to pricing."
Agouron now has about $124 million, less what's itsspent since June 30, 1995. Hurwitz said with its expectedburn rate of $35 million to $40 million per year, Agouronhas enough money to get to profitability if everythinggoes as planned.
What makes the company so attractive, Hurwitz said, isthe combination of its limited number of outstandingshares and its rapid clinical progress, which has resultedin two drugs being readied for pivotal trials.
Agouron's AG1343 is expected to be taken into a seriesof pivotal studies starting this year. While Agouron'sdevelopment timeline is behind some of its competitors inthe protease inhibitor field, its second-generation productis expected to have a better safety profile.
In small Phase II studies, the orally available drugreduced virus levels and increased CD4+ cell counts inHIV patients.
Agouron in October 1994 began a Phase II program of itsdrug, AG337, in six solid malignant tumor types. Thesynthetic small molecule is designed to inhibitthymidylate synthase, an enzyme needed for sustainedproliferation of cancer cells. n
-- Jim Shrine
(c) 1997 American Health Consultants. All rights reserved.