Last Updated Sep 21, 2009 11:55 PM EDT
A few micro-cap biotechs are turning to rights offerings, a European approach that involves selling newly-issued, discounted shares to existing shareholders. The discount doesn't matter because there's no dilution: each shareholder has the option to buy into the rights offering pro-rata and maintain their percentage of ownership.
Rights offerings aren't mainstream for U.S. biotechs, but Pharmacyclics raised about $29 million through one this summer, and BioMimetic Therapeutics used one to raise $17 million. Israel-based D-Pharm also raised about $15 million through a rights offering recently.
Another relatively unknown financing approach starting to make biotech inroads is the at-the-market (ATM) offering. ATMs involve selling shares into the market in small chunks, and while they can't be used to raise a boatload of money, they can avoid the discounts and warrants that can make registered direct offerings and PIPEs unattractive.
Avanir Pharmaceuticals raised $10.6 million recently through its ongoing ATM, and Array BioPharma set up a $25 million ATM last week. Antigenics, Novavax and Peregrine Pharmaceuticals also have used the approach in the past.
Small public biotechs trying to close a PIPE might also offer to take the money in tranches tied to the achievement of milestones, more like a private company financing. That approach helped Sunesis Pharmaceuticals close its $43.5 million private placement.
ATM photo by Flickr user TheTruthAbout..., CC