Cytogen Corp. announced Tuesday that it will sell up to 9.9percent of its outstanding shares to Fletcher Capital MarketsInc. in the form of newly registered stock. Prior to the sale, thePrinceton, N.J., company had about 23 million sharesoutstanding.
Fletcher will purchase the shares at 95 percent of their averagetrading price though April 27. The company estimated that thefinancing could bring in more than $12 million (based on atrading price of $5.63 per share). At Tuesday's closing price of$4.63 per share (down 88 cents), however, the deal wouldbring in closer to $10 million.
Cytogen will apply the funding toward both late-stage productdevelopment projects, such as Phase III clinical trials of itsbone pain product Samarium-EDTMP, and basic research, suchas its peptide-based molecular recognition unit program, inwhich the company is developing small chains of amino acidsthat mimic monoclonal antibodies. The company is also inclinical development with OncoScint Prostate (for prostatecancer imaging), OncoRad Ovarian (for ovarian cancer therapy)and OncoRad Prostate (for prostate cancer therapy).
In January, Cytogen (NASDAQ:CYTO) raised net proceeds of $9.4million from the private Regulation S placement of 2 millionshares with European investors. The company has not raisedany money publicly since its follow-on offering in May 1991,although its spinoff funding organization, CytoRad, made a $35million initial public offering in February 1992. CytoGen's latestplacement will increase its total outstanding stock to about 25.3million shares.
Cytogen's stock sold at about $22 per share after approval ofOncoScint at the end of 1992, but within three months of theproduct launch, the stock dropped to about $12 a share. AsOncoScint sales continued to disappoint investors throughoutthe year, the stock continued to decline.
Carol Werther, an analyst with Cowen & Co., suggested that thecompany has favored private investments because "the publicmarket without any Phase III results or better sales (of itsOncoScint products) would be very tough." The company needssome cash to bring it through completion of Phase III trials ofOncoScint Prostate and Samarium-EDTMP. Positive results fromthese trials might bring the company back to the publicmarket, Werther indicated.
-- Karl A. Thiel Business Editor
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