Millennium Decides Its Time for IPO
Millennium Pharmaceuticals Inc., hoping to capitalize on a firm market for biotechnology stocks as well as investor fascination with the prospects for an anti-obesity drug, plans to go public this week.
The Cambridge, Mass.-based company will become the latest in the field of genomics--the study of genes--to go public in a market that has in recent months been receptive to biotech stocks.
The company acknowledges in its prospectus that it will be years before it recognizes revenue from sales or royalties.
“I think because the genome area is still very warm, [Millennium] in fact will be a well-received deal,” said Jim McCamant, editor of the Berkeley-based Medical Technology Stock Letter.
Genomics firms seek to use knowledge of genes responsible for diseases or conditions to develop drugs for treating them.
Some experts see genomics as the future of drug development, but others say it will be years before any concrete treatments appear.
Millennium’s offering comes after the successful initial public offerings of genomic companies Sequana Therapeutics Inc. and Myriad Genetics Inc.
Sequana went public in August at $9 and was trading at $22 on Friday. Myriad followed in October at $18 and was trading at $30.
The IPO market for biotechnology came back in the second half of last year after a two-year drought. There were 29 biotech IPOs in 1995, 15 of which came in the last three months of the year, according to biotech and health-care consultants Feinstein Partners in Cambridge, Mass.
But there are some signs the market might be cooling. On Thursday, Sugen Inc. postponed a secondary offering, citing recent weakness in its stock.
Millennium is offering 3.5 million shares at an estimated price of $9 to $11 through underwriters Goldman, Sachs & Co. and Robertson, Stephens & Co. It is expected to trade under the symbol MLNM.O.
IPO Financial Network Corp., which predicts opening premiums for initial public offerings, expects the stock to open 75 cents to $1 higher than the offering price.
Millennium notes in its prospectus that it has yet to identify any lead drug compounds or create any products.
But believers in genomics see the approach as a fundamental advance in drug discovery.
“Investing in genomics companies is an opportunity to get in on the ground floor of a business that will drive the drug business for the foreseeable future,” said Punk, Ziegel & Knoell analyst Elizabeth Silverman.
Millennium, in partnership with Roche Holding Ltd. affiliate Hoffmann-La Roche Inc., is in the race to come up with a treatment for obesity.
With about one-third of American adults considered obese (defined as being at least 20% over one’s ideal weight), the market potential for an obesity treatment is huge. Last year Amgen Inc. of Thousand Oaks paid Rockefeller University $20 million for a license to develop products based on a gene that produces a protein known as leptin believed to regulate weight. A study found that obese mice injected with leptin lost substantial weight.
Millennium has identified the gene that makes a receptor for the protein. It is aiming to come up with a drug that enables the receptor to better transmit leptin’s signal to the brain to stop eating.
It is a matter of debate as to which approach might be more effective, and the competition to find an obesity treatment is expected to be fierce.
Amgen is due to start human trials with leptin this year.
Other companies working on obesity treatments include Neurogen Corp., Knoll Pharmaceutical and Interneuron Pharmaceuticals Inc., whose Progenitor Inc. subsidiary filed for an international patent for leptin last month.
