ZymoGenetics On the Prowl to Raise $85M in Stock Deal

Xconomy Seattle — 

ZymoGenetics is on the prowl for a lot more cash from investors—possibly more than $85 million.

The Seattle-based biotech company (NASDAQ: ZGEN) said today it is looking to sell 12 million new shares to investors in an underwritten stock offering, plus another 1.8 million shares to its underwriters. The company currently has about 69 million shares outstanding. Leerink Swann is acting as the sole manager of the offering.

ZymoGenetics didn’t release the terms of the offering, although this is clearly a big transaction in the making. The company’s stock has been on a roll, more than doubling in 2009, and reaching a closing price of $6.77 today. Assuming that ZymoGenetics offers investors a 7 percent discount to today’s close—which is about what Dendreon offered to investors in a similar deal last month—then the investors would get shares at about $6.30 a share. Multiply that by 12 million shares, and ZymoGenetics could pull in $75.5 million, plus another $11.3 million if the underwriters purchase their 1.8 million shares over the following 30-day period.

The company plans to use the cash for both its research and development, and for the commercial push behind its sole marketed product, recombinant thrombin (Recothrom). That drug hasn’t lived up to its initial sales projections, but ZymoGenetics insists that its version will still become the dominant player in a market for surgical bleeding that’s worth more than $250 million a year. Zymo recently retained the full U.S. rights to that drug after its partner, Germany-based Bayer, walked away from the product in every country except Canada.

ZymoGenetics has traditionally tried to keep at least a two-year operating cash cushion in the bank at all times, although it fell below that threshold during some hard times in 2008. It has made efforts to curb its spending in the past year, with two rounds of layoffs that brought its employee headcount down to about 300.