Some more info on the Xcel IPO. The reason for Elan's heavy involvement in this company is beyond my comprehension. There should be a reason, but what?
From WSJ.
IPO Spotlight: Xcel Pharmaceuticals To Sell $98M In Stock
WASHINGTON -- Xcel Pharmaceuticals Inc. filed an initial public offering Monday with the Securities and Exchange Commission to sell up to $97.75 million in common stock. This is a summary of the company's prospectus, as provided to the SEC:
THE COMPANY
Xcel, based in San Diego, is a specialty pharmaceutical company that acquires and markets prescription products in focused therapeutic markets in the U.S.
The company said the initial market is for neurology products and it considers this to be a focused market because a limited number of high-prescribing physicians write a significant number of prescriptions for neurology products.
Xcel's products, Diastat and Mysoline, are used in the treatment of seizures principally associated with epilepsy.
OFFERING INFORMATION
Xcel said it plans to sell up to $97.75 million in common stock. The number of shares and estimated price range for the deal weren't disclosed in the filing.
The company said Elan Corp. PLC (U.ELN) or one of its affiliates will purchase an undisclosed amount of Xcel shares upon closing of the offering. Elan has agreed not to sell any shares for a period of at least 180 days following the offering, the filing said. Xcel has borrowed about $99 million from Elan for use in previous acquisitions.
The company plans to use net proceeds from the offering for general corporate purposes, including product acquisitions and working capital, the filing said.
Salomon Smith Barney, Merrill Lynch & Co., ABN AMRO Rothschild LLC and Thomas Weisel Partners LLC were listed as underwriters for the offering.
Xcel plans to list its common stock on The Nasdaq National Market under the symbol XCEL.
EARNINGS
Period from Jan. 24, 2001 (inception) through Sept. 30, 2001
-----------------------------
Net sales $5,649,000
Operating loss ($5,768,000)
Net loss ($7,452,000)
BUSINESS STRATEGY
Xcel said its strategy is to increase sales of its current products through targeted sales and marketing efforts, to acquire additional products in neurology that leverage its existing sales organization, to acquire additional products in other focused markets and to develop product enhancements.
RISK FACTORS
The company said risk factors include: short operating history; sales from only two products; competition; ability to increase physician awareness; reliance on single third-party manufacturers and a single third-party distributor for products; failure to comply with government regulations; ability to identify a new manufacturer for Mysoline and negotiate a new manufacturing agreement; inability to predict changes in regulations, enforcement positions, statutes or legal interpretations; inability to grow business through acquisitions; ability to raise additional funds to pursue growth; competition with generic substitutes for Mysoline; dependence on protection of intellectual property rights; and ability to hire and retain key personnel.
MANAGEMENT
Name Age Position
---- --- --------
Michael T. Borer 42 President, chief executive and director
Cam L. Garner 53 Chairman of the board
Michael T. Borer, one of the company's founders, has served as CEO and president since inception.
Cam L. Garner, also one of the company's founders, has served as the chairman of the company's board since inception.
SHAREHOLDERS
Shareholder Shares
Before Offer (%) After Offer
Domain Partners V L.P. and affiliates 5,148,000 (27.56%) 5,148,000
New Enterprise Associates and affiliates 5,030,000 (26.89%) 5,030,000
Elan International Services Ltd. 3,030,000 (16.20%)
Michael T. Borer 1,900,000 (10.17%) 1,900,000
FINANCIAL CONDITION AND LIQUIDITY
As of Sept. 30, 2001, the company had cash and cash equivalents of $11.8 million and working capital of $14.6 million.
The company has $99 million of long-term debt outstanding with Elan that was issued in connection with the acquisition of Diastat and Mysoline.
Xcel also has access to a $10 million credit line with Elan, which can be drawn upon through March 31. No amounts had been drawn on the facility as of Sept. 30, 2001. The company said it expects to draw the $10 million of available credit prior to March 31. |
