Roche Holding's sale Monday of 20 million shares in Genentech raised $1.94 billion, a record for the biotechnology industry and the third-largest U.S. initial public offering of the year.
Switzerland-based Roche sold the 16% stake in Genentech at $97 a share, near the top of an $88-$98 range set by J.P. Morgan Securities, which managed the sale.
The deal produced a quick profit for the Swiss drug maker, which in June exercised an option to buy, for $82.50 a share, the third of South San Francisco-based Genentech that it didn't own.
Investors say Genentech is one of the strongest biotech companies, a group whose shares soared recently on expectations of faster earnings growth, lifting the Nasdaq biotech index 20% in the last two months. The company last week reported second-quarter earnings of 55 cents a share, 14 cents above the average forecast, citing strong sales of two new cancer drugs, Herceptin and Rituxan.
"Everybody I know who invests in biotech wants shares in Genentech," said Stephen Flaks, who manages a hedge fund that focuses on biotech shares.
The year's biggest IPOs came from Goldman Sachs Group Inc., which raised $3.7 billion in May, and Pepsi Bottling Group Inc., which raised $2.3 billion in March.
Genentech shares start trading today on the New York Stock Exchange under the symbol DNA.
Other new California stock offerings Monday included a deal from San Jose-based Gadzoox Networks Inc. (ticker symbol: ZOOX), which makes products that permit high-speed connections between data storage devices and computer networks.
Gadzoox raised $73.5 million by selling 3.5 million shares at $21, above the $18-$20 range set by Credit Suisse First Boston.
And Campbell, Calif.-based Web host Talk City Inc. (ticker: TCTY) sold 5 million shares at $12, above its $8-$10 range, in a deal led by Lehman Bros.