Cytogen Corp. said Tuesday that it has filed for a 3.5 million-unit offering for a new company, Cytorad Inc., at a proposedprice of between $10 and $12 per unit.
Cytorad will use the proceeds to engage Cytogen in the researchand development of antibody-based delivery systems todiagnose and treat prostate and bladder cancers.
Cytogen's prostate imaging product is in Phase III trials, and itsprostate therapeutic is scheduled to enter Phase I trials in thefirst quarter of 1992. Bladder products are in the researchstage.
Analyst Sarah Gordon of Amerindo Investment Advisors Inc.said that investors in unit offerings of this type take a veryconcentrated risk.
"The key, in my analysis, is how central is the technology to thecompany," Gordon said. "If I'm comfortable with this and feelthey'll have to buy it back, they can be very rewardinginvestment vehicles."
One down side, she cautioned, is that the unit offerings arevery illiquid because only a small number of shares areoutstanding.
Past unit offerings include Alza Corp.'s Bio-Electro Systems Inc.,Centocor Inc.'s Tocor Inc., Immunex Corp.'s Receptech Corp.,Genzyme Corp.'s Neozyme Corp. and Gensia PharmaceuticalsInc.'s Aramed Inc. Centocor's Tocor II Inc. offering hasn't yetbeen completed.
Centocor bought back Tocor Inc. in July, and Alza announced inNovember that it will reacquire BES.
In the Cytogen offering, each unit will consist of a commonshare of callable Cytorad stock and one warrant to buy acommon share of Cytogen (NASDAQ:CYTO). The units areexpected to trade on NASDAQ under the symbol "CYTD" throughJan. 31, 1994, after which the stock and warrants could tradeseparately.
Cytogen of Princeton, N.J., has the option through Jan. 31, 1997,to acquire all of the Cytorad common at specified prices.
Underwriters Merrill Lynch & Co. and Lehman Brothers havean overallotment option to buy an additional 525,000 shares.
Cytogen shares lost 50 cents on Tuesday, closing at $15.
-- Karen Bernstein BioWorld Staff
(c) 1997 American Health Consultants. All rights reserved.