Magainin Pharmaceuticals Inc. is the latest publicly tradedbiotechnology company to turn to private sources of cashrather than brave the still-chilly public markets.
The company announced Monday that it has raised $19.25million by placing 2.2 million newly issued shares of itscommon stock (NASDAQ:MAGN) with private investors at $8.75a share. This is a 7.9 percent discount to the trading price ofthe stock, which was priced at $9.50 a share at the time thedeal was negotiated, according to Jay Moorin, Magainin'spresident and chief executive officer.
The private placement was arranged by Hambrecht & Quist Inc.and S.G. Warburg Inc.
As with other placements of this sort, the actual closing of thetransaction is contingent on the effectiveness of an S3registration statement to be filed by the company. Thisstatement covers the resale of the new shares by thepurchasers, which are primarily institutional investors, Moorinsaid.
Magainin of Plymouth Meeting, Pa., will receive the proceedswhen the registration statement becomes effective. "When thedeal closes, Magainin will have in excess of $40 million in thebank," Moorin told BioWorld. Including the new issue, thecompany will have 13.25 million shares outstanding.
The company intends to use the proceeds from the privateplacement to fund its clinical trials, especially the ongoingPhase IIb/III trial of MSI-78 (a topical broad-spectrumantibiotic) for treating the skin infection impetigo. Magaininalso has earmarked the funds for its research and developmentprograms, construction and expansion of facilities,establishment of commercial manufacturing and marketingcapabilities, and other general corporate purposes.
The stock gained 25 cents on Monday to close at $10 a share.
-- Jennifer Van Brunt Senior Editor
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