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12:00 AM
 | 
May 05, 2003
 |  BioCentury  |  Finance

Rebasing Rigel

Now that the shock of being in a serious bear market has gone away, savvy investors are finding interesting ways to take advantage of two key factors: companies have made progress with old investors' money, and this progress can be bought extremely cheaply.
As a result, new investors are coming in at points where they can very carefully define value-adding milestones, and are doing so at incredible valuations. In some cases, they are being joined by old investors who are dollar cost averaging.
A case in point is last week's $46 million private placement by MPM Capital, Frazier, Alta Partners and HBM BioVentures in Rigel Pharmaceuticals Inc. Of the four investors in the placement, only MPM, which acted as the lead, is a first time investor in the company.
The deal gives RIGL a pre-money valuation of about $29 million, barely above the $27.3 million it had in cash at Dec. 31, and which is arguably cheap for a company with a product in Phase Ib testing. According to Lori Rafield, a general partner at Apax Partners who has been collecting current pre-money comps, pre-money valuations for private companies with a product in Phase I now can range from $20-$150 million.
The private placement of 72 million shares at $0.64 also includes warrants to buy 14.4 million shares at $0.64, and RIGL will offer...

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