HUMAN GENOME SCIENCES, INC. HAS DISCOVERED 14,000 "NOVEL" GENES
HUMAN GENOME SCIENCES, INC. HAS DISCOVERED 14,000 "NOVEL" GENES through its automated gene sequencing & collaboration with Craig Venter's Institute for Genomic Research, HGS claims in an Oct. I prospectus for an initial public offering. "Since its formation, the company believes it has, together with TIGR, identified approximately 17,500 human genes (including 14,000 novel genes) of a total of 75,000 to 100,000 human genes believed to exist," the prospectus states. HGS "believes that its technology will enable it to identify virtually all expressed human genes within three to five years," the prospectus declares. HGS "believes that the company and TIGR own substantially more high- speed gene sequencers than any other company or laboratory," the prospectus states. "The company is in the process of renovating a new facility" that will house a total of 73 automated DNA sequencers "and at least 40 additional associated laboratory robotic CDNA preparatory instruments." Human Genome Sciences has registered 2.25 mil. shares at a proposed maximum price of $12 per share. If the offering is priced at the maximum, HGS would gross $31 mil. Underwriters are Lehman Brothers, Bear Stearns, and Smith Barney Shearson. Rockville, Md.-based HGS was formed in June by HealthCare Investment Corp. to commercialize the discoveries of TIGR. The not-for-profit research institute was established by former National Institutes of Health researcher Craig Venter, PhD, and his colleagues in NIH's automated gene sequencing lab ("The Pink Sheet" July 13, 1992, p. 4). HGS has exclusive rights to all discoveries of TIGR in exchange for funding of $85 mil. over 10 years. About $9 mil. had been paid to TIGR as of Aug. 31, the prospectus states. HGS is obligated to pay another $22 mil. by Dec. 31, 1995, the prospectus adds. The company had $46.4 mil. in cash as of June 30. HGS has received $59 mil. from SmithKline Beechmn under a May agreement that HGS values at $125 mil. ("The Pink Sheet" May 24, T&G-7). "The company believes that the net proceeds of this offering, together with its available cash, interest income and payments under the collaboration agreements with SmithKline Beecham...should be sufficient to finance its operations for approximately two years," the prospectus states. HGS is pursuing patent applications for partial gene sequences, the prospectus discloses. "The company plans to apply for patent protection for a gene both when it is partially sequenced and later if it is fully sequenced, although there is substantial uncertainty regarding the patentability of partial gene sequences," the prospectus states. NIH sought patents on gene sequences discovered by Venter's lab, but the first batch of applications has been disallowed. While automated gene discovery is the initial focus of HGS' research, the prospectus adds that "the company's business will be dependent upon its ability to select from its partially sequenced genes those genes with significant commercial potential." HGS foresees potential areas for product development including therapeutic proteins, gene therapy, drug screening, antimicrobial agents (employing genetic information from infectious organisms), antisense, metabolic enzymes, vaccines, diagnostics and lab reagents. The company plans to seek additional corporate agreements to develop projects not picked up by SmithKline Beecham. Shareholders of HGS include HealthCare Investment Corp. (5.1 mil. shares, or 36.7% of the company post-offering), SmithKline Beecham (1 mil. shares, 7.3%), Venter (766,612 shares, 5.5%), TIGR (609,901 shares, 4.4%), Oxford Bioscience Funds (757,498 shares, 5.4%), and Aetna (757,500 share, 5.4%). The company's chairman and CEO is former Dana Farber researcher and HIC scientific advisor William Haseltine, PhD. VP-Research Craig Rosen, PhD, joined the company from the Roche Institute of Molecular Biology. Chief Financial Officer Lewis Shuster was formerly with Microbiological Associates, Inc. HGS has 77 employees.
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