Wednesday, October 07, 2009

Allos | Get it When You Can...

Many a seasoned and sophisticated biopharma executive have described to me the reality of when an entity does not need to raise capital it should because at some point it will be needed, and by not needing it, the situation may, just may…lend itself to perhaps lowering the cost of capital due in part to the leverage of not exactly needing it at the time of the raise (Wow, that was a mouthful). Now that Allos Therapeutics (NASDAQ: ALTH) has hung out their ‘open for business’ sign with the recent approval of Folotyn™ for the treatment of patients with relapsed or refractory peripheral T-cell lymphoma is additional capital required? Well building a commercial enterprise may take upwards of $10 to $20M, there are now scaled manufacturing needs and let us also consider the broad ongoing clinical pursuits for follow-on indications of Folotyn™. No doubt, all capital intensive pursuits.

A quick scan of the most recent balance sheet for Allos indicates cash and cash equivalents plus short term investments totaling approximately $105M, certainly that has evaporated throughout the second quarter at a burn rate of perhaps $14.1M (cash from operations plus cap ex), leaving a guesstimated cash position at around $80 - $90M today? Not exactly an uncomfortable place to be sitting. So what is one to do sitting in this seemingly well capitalized position? Correct! Go out and raise more money! And that is exactly what the plan is.

Allos has announced the price of a new public offering of 14,000,000 shrs of common stock set at $7.10 yielding a planned gross proceeds of $99.4M, expected to close on 13 October. Allos has also granted the underwriters a 30-day option to purchase up to an aggregate of 2,100,000 additional shares of common stock to cover over-allotments, if any. The deals’ underwriters include J.P. Morgan Securities, Citigroup Global Markets, Leerink Swann, JMP Securities, Needham & Company, and RBC Capital Markets.

Get it when you can…

No comments: