| Megabios Corp. | |||
| Ticker: | MBIO | 863A Mitten Road | |
| Exchange: | NASDAQ-National Market | Burlingame, CA 94010 | |
| Industry: | Service (SIC Code 8731) | (415) 697-1900 | |
| # of Employees: | 64 | ||
| Type of Shares: | Common Shares | Filing Date: | 8/1/97 | |
| U.S. Shares: | 2,500,000 | Offer Date: | 9/15/97 | |
| Non-U.S. Shares: | 0 | Filing Range: | $11.00 - $13.00 | |
| Primary Shares: | 2,500,000 | Offer Price: | $12.00 | |
| Secondary Shares: | 0 | Gross Spread: | $0.84 | |
| Offering Amount: | $30,000,000 | Selling: | $0.48 | |
| Expenses: | $600,000 | Reallowance: | $0.10 | |
| Shares Out After: | 12,225,939 |
| Manager | Tier | Phone |
| Montgomery Securities | Lead Manager | (415) 627-2100 |
| Hambrecht & Quist Incorporated | Co-manager | (415) 439-3626 |
| Issuer's Law Firm: | Cooley Godward Castro Huddleson & Tatum |
| Bank's Law Firm: | Gunderson Dettmer Stough Villeneuve Franklin |
| Auditor: | Ernst & Young |
| Registrar/Transfer Agent: | First National Bank of Boston |
Dollar amounts in U.S. millions except for per share data | |||||
| 9 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 6/30/96 | 3/31/97 | 3/31/96 | 3/31/97 | ||
| Revenue: | $1.89 | $4.59 | $0.75 | Assets: | $17.06 |
| Net Income: | -$6.90 | -$2.86 | -$5.50 | Curr Assets: | $12.90 |
| EPS: | -$0.94 | -$0.33 | Liabilities: | $3.81 | |
| Prior EPS: | -$2.13 | -$4.92 | Curr Liabilities: | $2.20 | |
| Cash Flow/Oper: | -$5.45 | $9.90 | $7.43 | Equity: | $13.26 |
| Cash Flow/Fin: | $11.55 | -$10.43 | -$0.82 | Cash: | $12.33 |
| Cash Flow/Inv: | -$1.12 | -$10.43 | Working Cap: | $10.71 | |
| Business Description |
| The company develops proprietary gene delivery systems and provides preclinical development expertise to create gene-based therapeutics for the treatment of prevention genetic and acquired diseases. The Company has developed several in vivo, non-viral gene delivery systems to address a number of potential therapeutic applications using a variety of therapeutic genes. The Company's clinical development and commercialization strategy is to enter into collaborative research and development agreements or "corporate partnerships" with pharmaceutical and biotechnology companies. To date, the Company has established corporate partnerships with Glaxo Wellcome plc ("Glaxo Wellcome") to develop a treatment for cystic fibrosis using the CFTR gene, Pfizer Inc ("Pfizer") to develop a treatment for solid tumors through angiogenesis inhibition and Eli Lilly and Company ("Lilly") to develop treatments for breast and ovarian cancer using the BRCA1 gene.The Company�s emphasis on entering into corporate partnerships is intended to enable the Company to extend and leverage its technology platform, focus on preclinical development of gene-based therapeutics and create a portfolio of product development programs sponsored by its corporate partners. This strategy limits the Company's exposure to capital-intensive activities such as large- scale clinical trials, commercial manufacturing and sales and marketing activities, while providing the opportunity to receive a substantial economic interest in the products which it develops in conjunction with corporate partners, primarily through the receipt of royalties on product sales. In addition, the Company believes that creating a portfolio of product development programs will reduce the Company's dependence on any particular product development program. |
| Competition |
| Gene delivery and gene-based therapy are relatively new, rapidly evolving areas of science in which significant and unexpected technological advances are likely. Rapid technological development could result in the Company's products or technologies becoming obsolete before the Company recovers a significant portion of its related research, development and capital expenditures. The Company is aware of several pharmaceutical and biotechnology companies which are exploring the field of gene-based therapy, are actively engaged in research and development in areas related to gene-based therapy, or have commenced clinical trials of gene-based therapeutics. Many of these companies are addressing diseases which have been targeted by the Company or its corporate partners. Megabios also may experience competition from companies that have acquired or may acquire gene-based technology from universities and other research institutions. As competitors develop their technologies, they may develop proprietary positions in certain aspects of gene delivery and gene-based therapeutics that may materially and adversely affect Megabios. In addition, the Company faces and will continue to face competition from other companies for corporate partnerships with pharmaceutical and biotechnology companies, for establishing relationships with academic and research institutions, and for licenses to proprietary technology, including intellectual property related to gene delivery systems. Corporate partners may also elect to internally develop gene-based therapeutics which compete with the Company's products. In addition, many other companies are developing non-gene-based therapies to treat these same diseases. Most of the Company's competitors and potential competitors have substantially greater product development capabilities and financial, scientific, manufacturing, managerial and human resources than the Company. There can be no assurance that research and development by others will not render the Company's delivery systems or the products developed by corporate partners using the Company's delivery systems obsolete or non-competitive or that any product developed by the Company or its corporate partners will be preferred toany existing or newly developed technologies. In addition, there can be no assurance that the Company's competitors will not develop safer, more effective or less costly gene delivery systems, gene-based therapeutics or non-gene based therapies, achieve superior patent protection or obtain regulatory approval or product commercialization earlier than the Company, any of which could have a material adverse effect on the Company's business, financial condition or results of operations. |
| Business Plan |
| The company provides technology and preclinical development expertise that it believes will be critical to the successful commercialization of many therapeutic genes. The company's commercialization strategy is to enter into corporate partnerships with pharmaecutical and biotechnology companies to develop gene-based therapeutics. The key components of the company's commercializations strategy are to: (I) Exploit Broad Technology Platform, (ii) Focus Resources on Conversion of Genes into Drug Candidates and (iii) Diversity Through Multiple Projects and Corporate Partners. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used for research and development activities, leasehold improvements, the purchase of capital equipment, working capital and general corporate purposes. |
| Name of Shareholder | % Owned Before | % Owned After |
| Entities affiliated with Mayfield Fund | 13.20% | 10.50% |
| A. Grant Heidrich | 13.20% | 10.50% |
| Lombard Odier & Cie | 7.10% | 5.70% |
| Entities affiliated with Institutional Venture Partners | 6.60% | 5.20% |
| Burr, Egan, Deleage & Co | 6.00% | 4.80% |
| William L. Brown | 5.50% | 4.30% |
| Frank J. Caufield | 5.00% | 4.10% |
| Officer Name | Title | Age |
| Benjamin F. McGraw, III, Pharm.D. | Chairman, Chief Executive Officer and President | 48 |
| Patrick G. Enright | Chief Financial Officer and Vice President | 35 |
| Lee B. Bussey, Ph.D. | Director, Bioprocessing | 44 |
| Ralph Niven, Ph.D., M.R. Pharm. | Director, Pharmaceutics and Delivery | 37 |
| Helen Jenkins | Director, Project Development | 34 |
| Robert I. Grove, Ph.D. | Principal Scientist, Cardiovascular | 49 |
| Jackie Papkoff, Ph.D. | Principal Scientist, Oncology | 41 |
| Beatrice Langton-Webster, Ph.D. | Senior Director, Life Sciences | 39 |
| Simba Gill, Ph.D. | Vice President, Business Development | 33 |
| Rodney Pearlman, Ph.D. | Vice President, Research and Development | 46 |