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Biotech / Medical : Millennium Pharmaceuticals, Inc. (MLNM) -- Ignore unavailable to you. Want to Upgrade?

To: Icebrg who wrote (2021)	1/22/2004 5:33:28 AM
From: Icebrg	Read Replies (2) \| Respond to of 3044

Millennium floats 'unusual' spinoff plan Mark Hollmer Journal Staff CAMBRIDGE -- Millennium Pharmaceuticals Inc. is trying to raise about $18 million in venture funding to launch an unusual private company spinoff in which it would retain a minority stake, and the company is shopping the proposal to a number of investors, the Boston Business Journal has learned. Lou Tartaglia, Millennium's vice president of new ventures, confirmed this week that he is shepherding the proposed spinoff, currently dubbed "Horizon," and that the company presented an abstract of the proposal at an investor conference in California last fall. He said he could not discuss details of what pieces Millennium wants to spin off, though the company would become a minority shareholder once enough investment is raised to launch the new startup. That's an unusual way to spin off a company because it avoids the more common public-company approach of spinning off a division and making it a wholly-owned subsidiary. "This is very different," Tartaglia said. The spinoff could follow the model of TransForm Pharmaceuticals Inc. in Waltham, a private startup launched in 1999 based on initial technology licensed from Millennium. That company has technology that identifies compounds with the best chance of becoming drugs and speeds up how fast they get to market. TransForm has raised more than $50 million in venture funding to date, according to its web site. Among other efforts, Millennium Pharmaceuticals also spun off Millennium BioTherapeutics in 1997 as a public subsidiary with a separate stock but reabsorbed the division two years later. News of potential spinoff underscores Millennium's gradual transition to a commercial biopharmaceutical company from its research and development beginnings. Millennium last year restructured and laid off more than 600 people, mostly in its research and development arms, in an effort to refocus as a commercial biopharmaceutical company. The 1,700-employee company is also aggressively trying to boost sales of its two FDA-approved drugs, Velcade to treat the blood cancer multiple myeloma and the heart treatment compound Integrilin. Three venture capitalists who declined to be identified said they were familiar with Millennium's latest proposal, and two had received informal pitches from the company -- one as long as 18 months ago. What's unclear, however, is precisely what Millennium would spin off. All the investors say the company appears to be looking at spinning off some aspect of its research or development arms or some combination of both, potentially in drug-development areas that aren't as successful yet. Millennium has 12 products in its drug pipeline focused on treating cancer, cardiovascular disease and inflammation. One venture investor said the spinoff proposal he saw was unusual and "hadn't been done by other people," though he said the idea was likely "still a work in progress." Another venture capitalist said the version he's familiar with seemed innovative because "in Millennium's case they clearly have a research and development process that can find more value than they have capacity for, value that exceeds their capacity to exploit." He said he'd expect such a spinoff to be hard to finance because of its research or development focus rather than the commercial products-related business plans more commonly attracting financing today. The investors had no immediate plans to invest. Millennium's fiscal 2003 financials come out on Jan. 27, but the company on Jan. 12 said it was on track to surpass its revised midyear guidance of about $420 million in revenue, a $535 million loss and about $800 million in the bank. But if the company has so much available cash, why would it need outside investment to launch a spinoff? The move might make sense, according to one venture capitalist, because it might remove the expense of the spun-off asset from Millennium's accounts if the company's ownership of the asset drops below a certain amount, sparing cash reserves in the process. Another said that using a company's own cash to fund a spinoff simply was "not a good idea" in the current market. Dennis Harp, an analyst at Deutsche Bank Securities in New York, said a spinoff at this point could potentially help the company focus more narrowly and reduce its relatively high cash burn rate of about $230 million for 2003. Millennium has been officially quiet about its plans. Marsha Fanucci, Millennium's senior vice president of finance and corporate strategy, said in November the company was not spinning off any substantial part of its research and development organization, adding that the company is always reviewing its assets and "constantly exploring alternatives." "There is nothing extraordinary in the winds," she said. boston.bizjournals.com