Genetics Institute Inc. on Thursday withdrew its proposedpublic offering of 1.25 million shares of common stock, blamingthe recent plunge of its stock price.
The stock (NASDAQ:GENI) had dropped more than 20 percent,from $36.63 to $29, following a strongly worded prediction onMonday by Shearson Lehman Brothers analyst Teena Lerner.She said Amgen Inc. would win the market for colonystimulating factors (CSFs), leaving competing GI and ImmunexCorp. "in the dust."
The stock closed up $1.13 at $30.13 on Thursday.
Ironically, Lehman Brothers is one GI's underwriters, andLerner previously had looked favorably on its GM-CSF.
Analysts don't often make negative comments about stockstheir investment bankers are underwriting. "That's right upthere with snowstorms in July," said David Stone, a biotechanalyst at Cowen & Co. in Boston.
"We were very surprised (at Lerner's comments), and we thinkit's primarily a change in her perception, since there's nonews," said GI spokeswoman Clare Midgley.
Analyst estimates of the share value vary widely. Stone saidthe stock should be priced close to $40, while Stuart Weisbrod,an analyst at Merrill Lynch, sees it in the low $20s.
Lerner could not be reached for comment Thursday.Underwriters at Lehman Brothers or Robertson, Stephens & Co.of San Francisco, the other firm handling the offering, alsocould not be reached.
When GI announced the offering on March 19, its stock was at$41. That was already down 34 percent from earlier in themonth. GI plunged $21.75 on March 6 -- from $62 to $40.25 --after a federal appeals court revoked its U.S. patent forerythropoietin (EPO) in favor of Amgen's EPO patent.
Withdrawing the offering won't have a major impact on GI,which has $61 million in the bank. That's enough to last at leastfour years, even if GI doesn't reach break even by later thisyear, as it says it will, according to Stone.
GI said it plans to proceed with its proposed offering of 1.8million units of SciGenics Inc., a research and developmentspinoff, at $22 to $24 per unit. The company expects that dealto close in early May.
-- Karen Bernstein BioWorld Staff
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