Human Genome Sciences Raising Cash (HGSI)

Human Genome Sciences, Inc. (NASDAQ: HGSI) is rasing cash.  The company announced that it is selling up to 12.5 million shares of common stock. The company earmarked funds for general corporate purposes, which includes acquisition of additional manufacturing capacity and development of new indications for BENLYSTA, potential sales and marketing activities, clinical trial, research and development, general and administrative and manufacturing expenses.  It also said it may use funds to potentially retire debt and said a portion of the proceeds could be for strategic investments.

What is interesting is that the company effectively is trying to say it has no acquisition targets today: “While we evaluate company, product, technology and similar opportunities from time to time, we currently have no material agreements or commitments with respect to any such acquisition or investment.”

But there is more to consider here than companies it wants to acquire.  Many investors have hoped that Human Genome’s lupus franchise would get it acquired.  If the company is raising cash again, that will potentially take away any extra takeover premium.

Shares are being sold under an existing shelf registration statement.  Goldman Sachs and Citigroup are joint book-running managers for the offering, and the underwriters will have a 30-day option to purchase up to an additional 1,875,000 shares of common stock.

It looks like our thought that this eliminates Human Genome as a buyout candidate is a shared one.  Shares closed up 2.6% at $27.82, yet shares are trading down close to $26.50 in the after-hours session.

This is likely to put the remaining hopes and rumors for a takeover any time soon to bed.

JON C. OGG