BioWorld International Correspondent

NeuroSearch A/S has completed one of Europe's biggest biotechnology fundraisings in 2007, netting DKK728.7 million (US$145.2 million) in a discounted rights issue.

The Ballerup, Denmark-based company raised gross proceeds of DKK771.3 million by issuing 2,754,579 new shares, priced at DKK280 per share. The offer price represented a discount of 27.5 percent on the stock's closing price of DKK400 on Oct. 30, immediately before the launch of the transaction.

Existing shareholders were entitled to subscribe for the new shares in a 2:9 ratio, and all but 0.4 percent of the available allocation was taken up. The shortfall was due to technical factors related to the structure of the offering, NeuroSearch said.

The cash significantly bolsters the company's balance sheet. It reported DKK354.9 million in cash and equivalents at the end of the second quarter. In its prospectus, published Oct. 31, the company said it held capital resources of approximately DKK219.5 million on that date.

"They've secured their cash position at least until the end of 2009, not taking into account any other income," Michael Novod, analyst at Handelsbanken Capital Markets in Copenhagen told BioWorld International.

The company has two drug candidates entering Phase III clinical trials, ACR16 in Huntington's disease and tesofensine in obesity, neither of which is yet partnered. Negotiations with potential partners for tesofensine probably are under way, Novod said, and the company's injection of cash will strengthen its hand in the discussions.

"In such negotiations, they are now a strong company - they will not be pressured on price." It probably will wait longer to enter a deal with ACR16. "They will do the Phase III alone. It will cost around €15 million," he said. The company may retain European rights to the compound but probably would seek a U.S. partner, he added.

The company also has three compounds undergoing Phase II clinical trials in a total of five indications, four more compounds in Phase I clinical trials and another nine in preclinical development.

"It's very rich, that pipeline. There's plenty of things to use the cash on," Novod said.

Its shares (Copenhagen:NEUR) were changing hands at DKK330 during afternoon trading Tuesday, valuing the company at around DKK5 billion. "I do think it's undervalued at these prices," Novod said.

Just a handful of European biotechnology companies have completed transactions on a similar scale this year. Basilea Pharmaceutica AG, of Basel, Switzerland, netted CHF310.1 million (US$282.2 million) in a secondary offering completed in March.

Sophia Antipolis, France-based NiCox S.A. netted €120.7 million (US$180 million) in a rights issue in February, while Strasbourg, France-based Transgene S.A. netted €95.3 million in a capital increase in June.

Carnegie A/S and Danske Bank A/S, both of Copenhagen, acted as joint global coordinators on the NeuroSearch offering.

Officials from NeuroSearch were not available for comment.