Heska’s IPO reveals much

FORT COLLINS — Even quiet companies reveal much when it comes time for an initial public offering.

Such was the case with the usually demure Heska Corp. of Fort Collins, which revealed several interesting facts as part of its recent registration statement with the U.S. Securities and Exchange Commission.

In addition to revealing a probe by the Federal Trade Commission into Novartis AG’s investment in the company, Heska described several recent events and provided financial details about which nothing was revealed to the public prior to the SEC filing.

Among the disclosures:

” Novartis pumped $36 million into the company in April 1996 for the rights to manufacture and market certain Heska products throughout the world.

” Heska had accumulated a deficit of $38.2 million, as of March 31, 1997, since its inception as Paravax Inc. in 1988.

” Research-and-development expenses increased to $14 million in 1996, according to the filing, from $6 million in 1995 and $3.7 million in 1994.

Heska’s public offering did not go without a hitch. The company offered 5 million shares of common stock, with an original anticipated offering price of $14 to $16. But the company revised that downward to $8.50 per share on the advice of the stock underwriters.

Heska began trading on the National Association of Securities Dealers Automated Quotations exchange July 1, grossing $42.5 million, rather than the $70 million to $80 million originally projected.

An additional 350,000 shares was to have been offered by Volendam Investeringen N.V., a Netherlands Antilles venture-capital firm that owns more than 3 million shares of Heska stock. But that group withdrew its stock from the sale after the offering price went down.

Heska president and CEO Fred Schwarzer said the lowered offering price was due mainly to investors’ concerns about biotech stocks overall, not the company in particular.

“Investors are very, very reluctant to invest in biotechnology IPOs at this time,” he said.

One biotech analyst told The Northern Colorado Business Report that Heska was “one of the hottest biotech companies to come along in a very long time.”

Investors, Schwarzer said, were saying, “‘Yeah, we believe all of that, but we need to see you a little bit more. We need to see you a little bit farther down the path before we agree that that level of investment is appropriate.'”

Heska is the eighth public company to be based in Larimer or Weld counties. A ninth, Concepts Direct Inc., a Longmont-based catalog mail-order business, is building a new headquarters in Weld County along Colorado Highway 119.