AEL mentioned briefly in biotech article in G&M today:
globeandmail.com
Biotech issues attract investors $1.57-billion
raised in first six months
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. |
