Seragen Inc., down to its last few months of cash, said Tuesday that itgained commitments for at least $20.3 million in bank financing.
The Hopkinton, Mass., company will issue warrants for 2.4 millionshares of common stock in the guaranteed bank financing and payinterest on the rest of the debt. Boston University, which owns 51percent of Seragen, is guaranteeing $11.8 million. Two otherguarantors agreed to secure loans of $8.5 million, and the company isseeking to secure another $3.3 million.
Seragen, in its most recent financial statement on Sept. 30, reported$12 million in cash and equivalents. Its burn rate has been about $1.5million per month, which means the company would have run out ofmoney around the end of May. The financing is expected to last thecompany until the third quarter of 1996, which takes into accountanticipated milestone and other payments, said Helen Maslocka,Seragen's vice president for investor relations/corporatecommunications.
The price at which the warrants can be exercised is being negotiated,but will be favorable to the investors, Maslocka told BioWorld.
"The dilution is substantially less [in this financing] than if we hit theequity markets," she said. "With the markets not particularly kind tobiotechnology companies now and no guarantees to secure financingof this size, we've been able to get ourselves money in a minimallydilutive manner."
Seragen has about 16.2 million shares outstanding. Its stock closed at$6.50 Tuesday, down 50 cents.
The company's lead product, being developed with Indianapolis-based Eli Lilly and Co., is an interleukin-2 (IL-2) fusion toxinmolecule for the treatment of cutaneous T cell lymphoma. It wastaken into Phase III trials in December. Seragen plans to test themolecule in other IL-2 receptor-expressing cancers.
Fusion toxins consist of a toxin fragment genetically fused to ahormone or growth factor that targets specific cell-surface receptorson disease-causing cells. Phase I/II trials of IL-2 fusion toxin havebeen completed for lymphoma, psoriasis and HIV. Plans are underway for Phase II studies, the company said.
Lilly and Seragen finalized a potential $45 million deal in August forthe development and marketing of fusion toxin molecules. Lilly paid$10 million initially, half in equity and half as an advance againstpurchase of bulkmaterial. Another $10 million will be paid upon certain milestones,and other payments would be made if Lilly exercises options forother indications. n
-- Jim Shrine
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