Human Genome raises capital

Md. research firm garners $100 million in private placement

Biotechnology

June 23, 1999|By Mark Guidera | Mark Guidera,SUN STAFF

Human Genome Sciences Inc., the Rockville genomics research company gunning to become a bio-pharmaceutical player, said yesterday that it has raised $100 million in a private placement.

The company, which posted a $12 million loss in its most recent quarter, plans to use a portion of the proceeds to speed development of several promising new medical treatments in the laboratory, said Steve Mayer, the company's chief financial officer.

Bolstered by the new financing, the company hopes to seek clearance from the U.S. Food and Drug Administration late this year or early next year to begin testing on humans up to two new experimental drug treatments, Mayer said.

The financing, underwritten by Credit Suisse First Boston, was placed with a group of institutional investors. In exchange, the company issued notes that are convertible into 1.9 million shares of Human Genome Sciences common stock at $52.20 per share.

Shares in Human Genome fell yesterday, shedding $3.5625 per share, to close at $41.5625.

Mayer said Human Genome decided to raise the money through a private placement instead of conducting a secondary public offering because it offered a way to raise money with little exposure to the volatility of the stock market.

"By using this approach we could do a financing a lot faster than a public offering," Mayer explained.

Even though it has more than $160 million in working capital available -- enough to finance operations for two to three years -- the company decided to raise more money now instead of waiting because the convertible note market "is very attractive right now," he said.

"It was partially a defensive move against the uncertainty of the market. You don't know how receptive it would be six months or a year from now," Mayer said.

The last time the genomics company sought financing was in March 1997, when it raised $112 million in a secondary public offering of 3 million shares at $37 each. The company went public in 1993 at $12 a share.

Mayer also said the company plans to use the money to expand its efforts to develop treatments from its new antibody research program, expand genomic research programs, and seek patent protection for genes and proteins it has discovered that may have medical uses.

Some of the proceeds may also be used to finance late-stage clinical trials of two experimental drugs now in early human testing.

These drug candidates include Keratinocyte Growth Factor-2, or KGF-2, a potential treatment for wounds and nerve damage, and myeloid progenitor inhibitory factor, a potential treatment for cancer patients in chemotherapy.

KGF-2 may have applications as diverse as treating burn victims, cancer and surgery patients, and diabetics suffering from chronic ulcers of the legs and feet.

Myeloid progenitor inhibitory factor is designed to suppress production of precursor bone marrow cells, sparing them destruction by toxic chemotherapy chemicals or the risk of chemotherapy-induced blood disorders.

Pub Date: 6/23/99

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