Monday, November 5, 2001
With the BioCentury 100 up 35% in a five-week run going into last week and Isis (ISIP) successfully raising $115 million in a follow-on, Icos (ICOS) and Ilex (ILXO) decided to charge into the follow-on market.
While $377.6 million in aggregate doesn't seem like a windfall - ICOS would raise $251.1 million and ILXO $126.5 million if each deal went off at their Friday closes - only $1.6 billion had been raised in U.S. follow-on offerings by 15 companies this year prior to the ISIP breakthrough.
ICOS, which is developing small molecules for autoimmune/inflammatory conditions, is looking to sell 4.5 million shares, while cancer company ILXO is offering 5 million shares. CS First Boston; Merrill Lynch; SG Cowen; Banc of America Securities; and Robertson Stephens will underwrite the ICOS deal, while CIBC World Markets; UBS Warburg; and U.S. Bancorp Piper Jaffray will handle the ILXO offering.
ILXO's deal will help replenish some of the money spent buying out Millennium's equity interest in the companies' 50-50 joint venture to develop and market Campath for chronic lymphocytic leukemia (see Silent Partner Role Didn't Fit", A8).
Meanwhile, the BioCentury 100 didn't continue to keep pace, shedding 5% on the week. ICOS lost $3.82 to $55.81, while ILXO slipped $4.80 (16%) to $25.30.
On the new issue front, Elan (ELN) subsidiary Athena Diagnostics plans to float a $119.7 million IPO on the Big Board. ELN will receive all the proceeds and will offer the entire overallotment. Athena reported net income of $5 million on revenues of $30.7 million last year, thanks to neurological assay sales and services.
ELN declined to say whether this is the first move in a strategy to float tracking stocks a la Genzyme. The news had little effect on ELN, which lost $1.45 to $46.05 on the week.
On the negative side, Cellomics withdrew its proposed IPO, through which is had hoped to sell 6 million shares at $8-$10. The news wasn't a surprise, as the high throughput screening company postponed the offering in December after reducing the price twice.
Neuer Markt shuffle
Faced by losses from the tumbling stock markets, German banks have begun restructuring their businesses. Last week, Sal. Oppenheim said it will cut back its designated sponsor role, leaving about half of its 45 Neuer Markt companies looking for new sponsorship in order to continue trading under the current scheme. Under Neuer Markt rules, companies that trade in the XETRA electronic trading facility of the Frankfurt Stock Exchange must have a market maker and two designated sponsors, without which it cannot trade.
"We have announced that we will end up with about half our current sponsorship portfolio," said Wolfgang Gerhardt, senior vice president in the equity business at the bank. "Sal. Oppenheim now intends to focus on companies that meet our criteria, the main points of which are: good market capitalization, sufficient liquidity and significant interest from institutional or private investors."
The bank is sponsor to autoimmune, cancer, and infectious diseases concern GPC Biotech (GPC); high throughput, chemistry and biology play Evotec (EVT); supply and service company Girindus (GIR) and photosensitizer play Biolitec (BIB).
Sal. Oppenheim is not saying which companies it intends to drop. The firm will carry out its current sponsorship contracts, some of which fall due at year end and others within the first months of 2002. "We will give the companies a chance to substitute a designated sponsor, and will assist former clients in winning new designated sponsors," according to Gerhardt. The ease of such moves remains to be seen, however, if other sponsors are considering similar moves.
Gerhardt said the decision to refocus "will not affect other business of the bank, and especially not the IPO or equity financing business."