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BRISTOL-MYERS ACQUIRING ALMOST 11% OF PRAXIS BIOLOGICS IN $17 MIL. PRIVATE PLACEMENT; FIRM HAS RIGHTS TO THREE PRAXIS VACCINES UNDER DEVELOPMENT

Executive Summary

Bristol-Myers plans to acquire 10.6% of Praxis Biologics via a 1.2 mil. share private placement, according to a recent S-1 registration statement filed with the Securities & Exchange Commission. The proposed deal with put $17 mil. into the Praxis coffers, based on a maximum offering price of $14 a share, and give Bristol-Myers a future opportunity, through the exercise of warrants, to pick up an additional 500,000 Praxis shares. The filing is the second for the Rochester, New York-based vaccine developer in less than six months. Last summer, the company registered for a 2 mil. share initial public offering. However, that offer was not apparently placed. Under the original deal, Bristol would have purchased 4.7% of Praxis Biologics, or 606,061 shares, for $10 mil. ("The Pink Sheet" July 28, p. 6). Under the new proposal, Bristol gets a larger equity position, and Praxis remains a tightly held corporation. Since Praxis was established in 1983, approximately 90% of the firm's total revenues have been derived from Bristol-Myers, the filing notes. Bristol currently markets one Praxis vaccine and has the rights to three additional pediatric vaccines under development. Praxis' pediatric influenza vaccine b-CAPSA I, the only approved vaccine product to date, is marketed by Bristol's Mead Johnson division. The company reported that approximately 8.9 mil. doses of have been sold in the 18 months since the product's launch in May 1985. Praxis Selling b-CAPSA/Directly To Military, Has Plans To Market Future Vaccine Products Based on the $6.50-$7 a dose price reported at that time, sales of the injectable vaccine have totaled $58-$62 mil. Praxis noted that its share of product revenues totaled almost $15 mil. In the long term, the company sees the vaccine population pool stabilizing at about 4 mil. children a year. While Mead Johnson has exclusive distribution rights for the U.S. and Canada, Praxis sells directly to the U.S. military. The company's marketing plans call for Bristol-Myers/Mead Johnson to market its pediatric vaccines while Praxis develops a capability to market those vaccines under development for infectious diseases in older children and adults. Praxis said it is currently pursuing 12 vaccine R&D projects, of which two -- an Hib glycoprotein vaccine for infants and a typhoid fever vaccine -- are in clinicals. In addition, the company indicated it would begin clinical evaluation of two other products in 1987, a vaccine for respiratory synctial virus and one for traveller's diarrhea. Through the first nine months of 1986, the company reported revenues $10.9 mil., with over half generated by sales to and royalty/distribution payments from Bristol-Myers in connection with b-CAPSA 1. Net income was $1.6 mil. for the period. The proposed sale of stock to Bristol will increase Praxis' cash position from $6 mil. to almost $23 mil. Of the nearly $17 mil. in proceeds, the company intends to apply "approximately $10 mil. for product R&D costs, including studies overr the next several years." Roughly $4 mil. will be put into the construction of a $30 mil. research, development and manufacturing facility. Praxis said it is still seeking bank financing for the remainder of the building's cost.
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