Cytogen Corp. announced last week that it has entered into adefinitive agreement to sell 2 million new shares of commonstock (NASDAQ:CYTO) in a private placement with Europeaninvestors. Net proceeds of the Regulation S placement will be$9.4 million, the Princeton, N.J., company said, with sharesselling at an average price of $4.72 each.
The Regulation S transaction is similar to a private investmentin public entity (PIPE) placement in that the shares were soldat a discount to investors who cannot immediately trade them,Cytogen's chief financial officer, T. Jerome Madison, toldBioWorld. Under Securities and Exchange Commissionregulations, shares can be sold overseas without registrationunder certain conditions, one of which is that the stock cannotbe resold for at least 40 days. Madison predicted, however, thatthe investors, which he described as "significant institutions,"would be long-term holders of the new stock.
With the placement, Madison said, the company will haveslightly more than 23 million shares outstanding. Cytogen andits funding vehicle, Cytorad, had combined cash ofapproximately $40 million prior to the placement, he said.Madison estimated the company's net cash burn rate at about$1.5 million per month.
While the company said that it does not currently plan to makeany more Registration S placements, it is considering proposalsto raise additional capital.
Proceeds from the placement will be used for general corporatepurposes, the company said, including marketing of OncoScintCR/OV (colorectal and ovarian cancer imaging) anddevelopment of molecular recognition units, the company'speptide targeting research program that uses small chains ofamino acids to mimic MAbs.
Cytogen will also use the funds for clinical trials of SamariumEDTMP (for the treatment of bone pain), OncoScint Prostate (forprostate cancer imaging), OncoRad Ovarian (for ovarian cancertherapy) and OncoRad Prostate (for prostate cancer therapy).
Cytogen's last financing was in May 1991, when the companycompleted a follow-on offering of 2 million shares at $14.75each for net proceeds of $27.8 million. CytoRad completed itsinitial public offering in February 1992, raising $35 millionthrough the placement of 3.5 million shares.
Cytogen's stock closed at $5.50 a share on Friday, down 25cents.
-- Karl A. Thiel Associate Editor
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