CoCensys Hopes to Raise $28 Million in New Capital Through Sale of Stock : Finance: Three-year-old biopharmaceuticals company plans to go public with an offering of 2.5 million shares at $12 each.
CoCensys Inc., a 3-year-old biopharmaceuticals company involved in developing treatment for central nervous system disorders, said Wednesday that it plans to go public to raise as much as $28 million in new capital.
The company, founded in 1989 by a Menlo Park venture capitalist and a team of medical researchers from USC, is specializing in developing compounds that can be used to treat epilepsy, anxiety and various sleep disorders. It is also working with a separate Irvine medical-products firm, Acea Pharmaceuticals Inc., on development of compounds to treat ischemia--the neurological degeneration that follows a stroke, cardiac arrest or head injury.
Robert McNeil, co-founder and chairman of both CoCensys and Acea and a partner in Sanderling Ventures of Menlo Park, said CoCensys hopes to sell 2.5 million shares at $12 each. About $2 million of the $30 million gross from such a sale would go to the underwriters, Montgomery Securities and Hambrecht & Quist, both based in San Francisco.
The prospectus for the offering was filed with the Securities and Exchange Commission early in December. The SEC typically takes 30 to 45 days to review a prospectus and approve or reject a stock sale.
Industry analysts said Wednesday that, despite the still-weak national economy, this is a good time for a small company like CoCensys to go public.
“There has been a big rally in biomedical stocks since the market hit a low in early October, and there has been a rash of new (public offering) filings in the last three or four weeks” by medical and pharmaceutical companies, said Jim McCamant, editor of the Medical Technology Stock Letter, published in Berkeley.
Mark Mattheson, an analyst with Crowell, Weedon & Co. in Los Angeles, said many smaller biomedical companies “are doing better right now than the bigger companies because money managers (for large investment pools and pension-fund programs) are looking for new ideas to put some of the funds they handle into.”
Proceeds from the stock sale will be used for research and development, including clinical tests, and for general corporate purposes and working capital, CoCensys officials said in the SEC filing.
The company reported a loss of $4.2 million for the first nine months last year. Mattheson said it is typical for small biomedical research companies to operate in the hole for several years. CoCensys’ losses should not affect the fate of its stock offering, he said.
