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Genentech IPO soars
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July 20, 1999: 4:43 p.m. ET
Shares of biotech company jump more than 30 points after reissue by Roche
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NEW YORK (CNNfn) - Shares of biotechnology company Genentech Inc. soared more than 30 points above its initial public offering price Tuesday, as investors bet heavily on a top company in a popular sector.
Genentech (DNA) closed at 127, up 30, in trading on the New York Stock Exchange. Earlier in the day, it had reached a high of 132.
Swiss pharmaceutical group Roche Holdings AG offered 20 million shares of Genentech at 97 per share. Roche exercised its option to repurchase all outstanding Genentech shares at 82-1/2 per share on June 30, then decided to make 15.7 percent of the company public.
"It's a hot sector and Genentech has the best pipeline in the business," said Charles Engelberg, a biotechnology industry analyst at AmeriCal Securities. "The only reason the shares didn't trade higher before was because everybody knew that Roche had those options."
Concerns that Roche would repurchase at 82-1/2 kept the stock price down, but some investors still bet against that eventuality with Genentech trading above 86 at the time of repurchase.
Now investors are showing confidence in the company, which has a proven track record.
"Genentech has had two of the most successful cancer drug launches in the history of the industry -- Rituxan and Herceptin," Engelberg said.
Herceptin, used to treat breast cancer, and Rituxan, an antibody that increasingly is being used to treat non-Hodgkin's lymphoma, a malignancy that strikes certain glands, generated strong sales in the second quarter of this year, Genentech said last week.
South San Francisco, Calif.-based Genentech's best-selling product is Activase, a blood-clot treatment for heart attack victims.
-- from staff and wire reports
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Genentech
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