Two Biotech Firms Plan to Sell Shares to Public
Two San Diego biotechnology companies, Gensia Pharmaceuticals and Mycogen, say they plan to to sell stock to the public, an indication that the stock market’s perception of biotechnology issues may be improving.
According to a registration statement filed with the federal Securities and Exchange Commission, Gensia Pharmaceuticals plans to sell 2.5 million shares in an initial public stock offering priced at $9 to $11 a share. The offering could raise up to $27.5 million.
The company has also asked for the right to sell 375,000 additional shares if warranted by investor demand. All stock to be sold in the offering, which is scheduled to be completed in June, will be newly issued shares.
Gensia Pharmaceuticals is developing a line of biochemicals called purine/pyrimidine compounds to treat and diagnose ischemic heart disease, a variety of ailments including angina that result from an insufficient supply of oxygen to the heart.
The company now has a therapeutic drug and a diagnostic product in clinical trials, both of which could be on the market by 1994 if the tests are successful. Published reports have put the potential market for the two Gensia Pharmaceuticals products at $100 million or more.
Founded in 1986, Gensia has attracted $41 million in venture capital, but has not generated revenue or turned a profit. Its largest shareholder is Marion Merrell Dow, which this year paid $15 million to buy 15.9% of Gensia stock.
Other Gensia Pharmaceuticals shareholders include Domain Associates; Kleiner, Perkins, Caufield & Byers, and Biotechnology Investments Ltd. of Great Britain.
Mycogen, a San Diego manufacturer of biopesticides, announced Friday that it plans to offer 1.7 million shares to the public in a secondary stock offering. Assuming that the new shares sell at Mycogen’s Monday closing price of $13.25, a 1.7-million share offering could raise $22.5 million. All the shares are being sold by the company.
Unlike Gensia, Mycogen is selling products, including a pesticide for the Colorado potato beetle, and is generating revenues.
In its June, 1987, initial public stock offering, Mycogen raised $17 million by selling 1.6 million shares at $11 each. With the sale of the 1.7 million additional shares, Mycogen shares outstanding will total 10.4 million. The company’s leading shareholders before the offering are Lubrizol Corp., with a 16.7% stake, and Kubota Corp. of Japan, with a 13.7% stake.
