Biotech issues attract investors $1.57-billion raised in first six months
URL: http://news.globetechnology.com/search97cgi/s97_cgi?action=View&VdkVgwKey=%2Fjules1%2Fusr%2Flocal%2Fnewglobetechnology%2Farchive%2Fgam%2FNews%2F20000703%2FRBIOT%2Ehtml&DocOffset=1&DocsFound=175&QueryZip=subject+%3Ccontains%3E+biotechnology&Collection=Tech&SortField=sortdate&ViewTemplate=TechDocView%2Ehts&SearchUrl=http%3A%2F%2Fnews%2Eglobetechnology%2Ecom%2Fsearch97cgi%2Fs97%5Fcgi%3FQueryZip%3Dsubject%2B%253Ccontains%253E%2Bbiotechnology%26ResultTemplate%3DTechResults%252Ehts%26QueryText%3Dsubject%2B%253Ccontains%253E%2Bbiotechnology%26Collection%3DTech%26SortField%3Dsortdate%26ViewTemplate%3DTechDocView%252Ehts%26ResultStart%3D1%26ResultCount%3D10&
Date accessed: 10 July 2000
LEONARD ZEHR
Biotechnology Reporter
Monday, July 3, 2000
At the beginning of June, Léon Gosselin and David Mims, the top two
executives of Axcan Pharma Inc., arrived in New York to begin a
five-city road show aimed at raising up to $25-million (U.S.) through
an issue of common stock.
To their utter surprise, the first institutional investor they met agreed to
purchase the entire issue. Two more money managers also wanted a
piece of the action and, after one day in the Big Apple, the two
executives returned to Montreal with commitments to sell $40-million
of stock to three funds.
"We wanted to be cautious with this because we're not very well
known yet in the United States and we weren't even sure we could
raise $25-million," said Isabelle Adjahi, Axcan's manager of investor
relations.
"But it's pretty clear that demand [for biotech stock offerings] is there,"
she added.
According to figures compiled by Dundee Securities Inc., biotech
companies raised $1.57-billion (Canadian) of equity and debt in the
first half this year, up 40 per cent from $1.12-billion a year earlier.
"There is a lot of work now being done behind closed doors to get
financings and IPOs [initial public offerings] ready for after the
summer," said Claude Camiré, Dundee's biotech watcher.
Michael Denny, director of health care investment banking for Yorkton
Securities Inc., agrees. "We don't see any problems ahead and expect
financing activity in the second half to be strong."
Fuelling the upturn has been a strong stock market showing by the
biotech sector this year. Many biotech stocks doubled and tripled in a
broadly based rally at the start of the year. By and large, they are still
trading at about half of those highs.
Take Hemosol Inc., for example. It climbed to a high of $27 from $7
this year, closing Friday at $14.55 on the Toronto Stock Exchange.
The Toronto-based developer of Hemolink, a blood substitute product
to replace transfusions, sold $69-million of new stock in two separate
issues this year.
Philippe Lacaille, chairman and chief executive officer of Lorus
Therapeutics Inc., said that in the first quarter, "if you had a
bio-name, you could sell anything to anybody. In the second quarter,
fund managers were looking for quality stocks with strong
fundamentals." Toronto-based Lorus said it sold $46-million of new
stock in April after receiving requests from investors for $75-million.
Strong demand is luring many private biotech firms with advanced
products to consider going public.
In mid-June, Montreal-based Neurochem Inc. closed a $32-million
IPO, which is expected to increase to $36.8-million, a record for an
IPO in the biotech sector. The stock, issued at $8.25 a share, closed
Friday at $8.30.
Doug Janzen of investment banker Loewen Ondaatje McCutcheon
Ltd. said 23 institutions in Canada and Europe took positions in that
offering. Neurochem wanted to raise about $25-million but received
requests for $58-million of stock.
Investment sources say Chromos Molecular Systems Inc. of
Vancouver is in the final stages of marketing its IPO. Waiting in the
IPO wings is MDS Proteomics Inc., which parent MDS Inc. of
Toronto has valued at $600-million. Other possible IPO candidates:
CryoCath Technologies Inc. of Montreal, which already has raised
$54-million in private financing for its catheter technology.
Ecopia BioSciencies Inc., a unit of Theratechnologies Inc. of
Montreal, which is using the genetic makeup of micro-organisms to
develop new therapeutics.
GlycoDesign Inc. of Toronto, which is in clinical trials with an
anti-cancer drug.
Kinetek Pharmaceuticals Inc. of Vancouver, which is working with
the B.C. Cancer Agency on a novel way to treat tumours caused by
certain genetic mutations.
What is attracting many money managers to biotech is a growing list of
companies in late-stage clinical trials with various drug candidates and
products.
Fresh on many investors' minds is QLT Inc., whose stock price ran up
10 times between the release of phase III data on its Visudyne
treatment for blindness in January, 1999, and final marketing approval
by the U.S. Food and Drug Administration in April of this year.
Analysts say shares of late-stage companies such as Hemosol, Inex
Pharmaceuticals Corp. of Vancouver, AEterna Laboratories Inc.
of Montreal and Synsorb Biotech Inc. of Calgary could run up with
the release of phase III results over the next year or two.
"The market is beginning to appreciate that on a fundamental basis,
there's good value in biotech," Mr. Denny said. "And there's growing
awareness of the potential of the human genome project that will make
people look at investing in biotech."
Many of the top 30 biotech companies in the country tracked by
National Bank Financial are "better funded today than they were a year
ago," Mr. Groome said.
RECENT BIOTECH FINANCINGS
Axcan Pharma common shares
$40-million (U.S.) private financing
Angiotech Pharmaceuticals shares
$158.5-million public financing
Biomira common shares
$100-million (U.S.) credit line
Biovail debentures
$300-million (U.S.) public financing
Biovail common shares
$101-million (U.S.) public financing
Hemosol common shares
$46-million public financing
Lorus Therapeutics common shares
$46-million public financing
Micrologix Biotech special warrants
$40-million private financing
MDS Proteomics special warrants
$82.5-million private financing
Category: 16. Economics and Biotechnology