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Biotech / Medical : OXIGENE INC. (OXGN) -- Ignore unavailable to you. Want to Upgrade?

To: Miljenko Zuanic who wrote (210)	5/31/2001 6:54:27 PM
From: nigel bates	Read Replies (2) \| Respond to of 273

Haven't Oxigene heard of Acqua Wellington ?... By Toni Clarke NEW YORK (Reuters) - A sagging stock price and dwindling funds are proving to be tough hurdles for Oxigene Inc. (NasdaqNM:OXGN - news), a leading producer of promising new technology that fights cancer by choking off blood flowing to tumors. Oxigene's Combretastatin drug has received positive reviews from medical experts and is entering the intermediate stage of U.S. clinical trials ahead of rivals AstraZeneca Plc (quote from Yahoo! UK & Ireland: AZN.L) and Aventis SA , which are much bigger firms. Yet the Watertown, Massachusetts-based company's shares are trading at $5 on the Nasdaq, off a 52-week high of $13.25, a slump Oxigene attributes to its low U.S. profile. Until recently it was headquartered in Stockholm, Sweden. With only $24 million in cash, Oxigene is keen to raise new funds as it only has enough money to last two years. But its chances of gaining fresh funding from where that came from -- the equity markets -- are slim. ``Market conditions and the decline in our stock price limit our ability to do a secondary offering,'' said Frederick Driscoll, Oxigene's president of finance and operations. Driscoll is reluctant for Oxigene to take on debt because he wants to ``keep the capital structure of the company fairly straightforward.'' But with the public markets closed off, at least for now, he has few options. ``We might consider interim financing in the form of a private placement,'' Driscoll said. Oxigene plans to release results of its first U.S. clinical trial of Combretastatin later this year. TARGETING INVESTMENT BANKS Oxigene suffers from its small size. To boost awareness among investors, Oxigene hopes to hire an investment bank that can help it raise funds and whose analysts will initiate the kind of positive coverage needed to boost the company's share price. Only one analyst now covers the company: London-based Sam Williams of Robertson Stephens. But with a market capitalization of just $70 million and 2000 revenue of $3.6 million, Oxigene is unlikely to attract a so-called ``bulge bracket'' investment bank, such as Goldman Sachs or Morgan Stanley Dean Witter. Oxigene doesn't want, however, to hire a boutique bank. ``We're looking for an investment bank that's multinational, one that can provide analyst coverage and conduct a broad spectrum of financings,'' Driscoll said. That may get easier as Combretastatin moves through Phase II clinical trials. In February, specialist health publication The Lancet said preliminary results from Combretastatin's Phase I trials were ``very encouraging.'' The drug has also started to generate revenue. Oxigene licensed it to pharmaceuticals company Bristol-Myers Squibb for $10 million. It expects an additional $60 million as future milestones are reached, and royalties on sales of finished products. NEXT GENERATION OF COMBRETASTATIN In the meantime, Oxigene is working on the next generation of Combretastatin in conjunction with Baylor University, Arizona State University and Bristol-Myers Squibb Co. (NYSE:BMY - news) It is also working to develop non-cancer uses for Combretastatin, targeting diseases such as psoriasis, a skin disorder that is characterized by over production of blood vessels or cells. ``We hope to nominate one of four candidates and move forward with clinical trials later this year,'' Driscoll said. The new drug uses a different molecule from the one used in Combretastatin. The drug attacks flat cells and makes them round. Once round, the cells block the blood vessel and prevent blood from flowing through to the tumor. While Bristol-Meyers Squibb has the right to negotiate first for the new compound, it doesn't have the right of first refusal, nor does it have rights over any alternative diseases for which the technology may be effective. That means Oxigene can retain more profits for itself. To realize its ambitions, though, Oxigene needs more money for research and development to maintain its lead over such European pharmaceuticals companies AstraZeneca and Aventis, which are also targeting vascular, or vessel-oriented, drugs. The market for a successful vessel-attacking drug could be substantial, the company said. David Chaplin, head of research at Oxigene, estimates sales would have to reach $600 million a year if the company is to recoup its costs. That is feasible, Oxigene executives say, because the drug may work best in combination with chemotherapy. The chemotherapy market rose 24 percent as measured by sales between 1999 and 2000, and is expected to grow another 15 percent a year until 2020, driven by the aging U.S. population....