Monday, November 22, 1999
Pass the biotech paper . . . and the cranberries
By Eric Pierce
& Shaun Brown
With Thanksgiving rapidly approaching in the U.S., investors appear to have a healthy appetite for biotech paper. Last week, investors gobbled up $245.5 million in four underwritten biotech offerings. Three of the deals were follow-ons - ImClone (IMCL, $88 million), Alexion (ALXN, $42 million) and Progenics (PGNX, $38 million), all of which closed on Friday. It's clear that the follow-on market is heating up: 13 follow-on deals have priced so far in the fourth quarter, raising a total of $733.7 million (see chart); only 15 such deals had closed in the first three quarters of the year.
Last week's other deal was an IPO, with combinatorial chemistry play Symyx (SMMX) raising $77.5 million, exceeding its own expectations of $69 million when it filed the deal on Sept. 21.
The three high-profile IPO companies still in the financing queue are hoping investors will have room for seconds. But don't expect Tularik, Maxygen and Caliper to close before the holiday.
Caliper told Ebb & Flow that it has just wrapped up the sales force meetings and is embarking on a two- to three-week road show that will take the "lab-on-a-chip" company through the U.S. and Europe.
Maxygen spokesperson Jeannine Medeiros said the DNA shuffling company is waiting for the SEC's comments on the company's red herring, which was filed on Oct. 20. The company hopes to raise up to $80.5 million.
But all eyes are on Tularik, which is seeking a $500 million valuation despite the fact that its in-licensed lead compound hasn't yet started Phase II trials. Tularik hopes to raise $68.75-$81.25 million through the sale of 6.25 million shares at $11-$13. A $12 price would value the company at $496.8 million (see Ebb & Flow, Oct. 18).
Tularik is in the quiet period and would not characterize how the deal is progressing. But Bruce Fielding, CFO of IntraBiotics, which just raised $25 million in a private deal (see below), is keeping a close eye on the deal. Fielding said he'd like to try the public waters sooner rather than later, but is taking a wait-and-see approach based on Tularik's success. PharmaVision, a Swiss-based closed end mutual fund that owns 23.5 percent of Tularik, is planning to pick up at least a portion of the IPO.
Too much shouldn't be read into SMMX's deal because its not a pure health care play. The company is applying its combichem platform to industrial applications that include commodity chemicals and polyofins, fine chemicals, specialty polymers and electronic materials. Investors liked the story, however, as they drove the shares up $8.438 (60 percent) to $22.438 on Thursday. Friday's close of $23.50 values SMMX at $653.3 million. Post-IPO, Institutional Venture Partners and Venrock Associates own 10.4 percent and 6.1 percent respectively.
Herculean financing effort
A $40 million paper deal may be chicken-feed for some. But for Avigen (AVGN), which spent the better part of its post-IPO life beneath $5 a share, the $40 million it raised in a private deal last week is a Thanksgiving feast. The gene therapy company raised $22 million in its 1996 IPO and had raised a total of $52 million prior to this