Mycogen Corp. Plans Public Stock Offering
Mycogen Corp., the first company to be given Environmental Protection Agency permission to test genetically engineered pesticides in the open field, plans to raise up to $24 million in an initial public stock offering.
According to a registration statement filed with the Securities and Exchange Commission, Mycogen plans to sell 1.6 million shares priced at $13 to $15 per share. Proceeds from the sale of the newly issued shares will be used to finance continued research and development of biopesticides and the establishment of a sales organization, Vice President Andy Barnes said Tuesday.
Founded in 1983, Mycogen has yet to bring a product to market and through the end of fiscal 1986 had accumulated losses totaling $11.2 million on virtually no revenues. The company is trying to develop half a dozen “protein biotoxins” produced by genetically cloned microorganisms to fight a variety of agricultural pests including Colorado potato beetles, gypsy moths, mosquitoes and weeds.
Mycogen’s first product, a Colorado potato beetle pesticide, will not reach the market until 1988, assuming the EPA approves it as expected later this year, Barnes said. The product will try to capture part of the $100-million market in products for Colorado potato beetle control.
Only Income From Interest
In the preliminary prospectus for the offering, Mycogen said it does not expect its products to generate “significant” revenues for several years.
From its founding through the end of last fiscal year, Mycogen’s only revenues were interest income. But in January, the company signed a deal with Lubrizol Corp.’s venture capital subsidiary that will mean $5.4 million in contract research and development revenues to Mycogen over the next two years. In exchange, Lubrizol will get rights to use Mycogen’s biotoxin technology in the “plant science area,” a market Mycogen has no plans of entering, Barnes said.
For the first six months of fiscal 1987, ended March 31, Mycogen reported a net loss of $2.3 million on revenues of $540,000. Nearly all of the revenues came through the Lubrizol contract.
Lubrizol, a specialty chemical manufacturer based in Wickliffe, Ohio, is the largest Mycogen shareholder, holding 28% of shares outstanding before the public stock offering. The second largest shareholder is Palo Alto-based Vanguard Associates with 23% of Mycogen shares. Vanguard’s David Ramler is Mycogen chairman.
Mycogen President Jerry Caulder owns 5% of his company’s present shares. Before founding Mycogen in 1983, Caulder spent 15 years in Monsanto Co.’s agricultural products division, Barnes said.
The stock offering, which would bring Mycogen’s total shares outstanding to 6.4 million, is being underwritten by Montgomery Securities of San Francisco and Piper Jaffray & Hopwood of Minneapolis.
