Nova Pharmaceutical Corp. said yesterday that it wants to raise almost $20 million in a stock offering designed to support its research into new drugs, while two of the Baltimore company's biggest stockholders said they would trim their holdings.
Nova said Tucker Anthony Inc. of New York will be the lead underwriter in its offering of 3 million shares of its stock. Nova stock closed at $6.25 a share, down 25 cents, in over-the-counter trading yesterday, giving the offering a tentative value of $18.75 million.
"The proceeds from the offering are expected to be used to finance the continued research and development, including clinical trials, of the company's planned therapeutic products," Kira Bacon, a company spokeswoman, said, quoting from the prospectus for the offering. "Funds may also be used for the acquisition of additional or complementary products,technologies or businesses, or for general corporate purposes."
Federal regulations bar Nova officials from saying more than that publicly while the offering is pending, Ms. Bacon said. The prospectus was still being printed yesterday.
Nova is trying to develop several drugs; the most promising are compounds to treat central nervous system disorders and inflammation throughout the body.
The 9-year-old company has never made a profit because its products are still in development. Its standing in the young biotechnology industry has slipped slightly as other early start-up companies have brought drugs to the market.
At the same time Nova carries out its offering, two major drug companies, Marion Merrell Dow Inc. and SmithKline Beecham PLC will each sell 200,000 Nova shares. But the companies, which got the stock as part of research partnerships during the 1980s, said their decision to sell didn't show a lack of faith in Nova.
"It's pretty much just an investment," said Richard Johnson, a spokesman for Marion Merrell Dow in Kansas City, Mo.
"We have a number of investments in smaller companies," Mr. Johnson explained, "and it's really just an investment portfolio decision to sell a small minority of our stake in Nova."