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Merrill Lynch Introduces Single Security Representing 20 Biotech Stocks
Monday, November 22, 1999 05:59 PM
NEW YORK, Nov. 22 /PRNewswire/ -- Merrill Lynch, Pierce, Fenner & Smith Incorporated today announced the launch of Biotech HOLDRs(SM), a new security representing undivided beneficial ownership interest in the common stock of 20 specified companies involved in various segments of the biotechnology industry.
Today, 4.5 million Biotech HOLDRs were priced for initial sale to the public at an aggregate offering price in excess of $490 million. Trading of Biotech HOLDRs begins on Tuesday, November 23, 1999, on the American Stock Exchange under the symbol "BBH." Newly issued Biotech HOLDRs will be available on a continuous basis.
"Investors have embraced the HOLDRs investment platform," said Steve Bodurtha, First Vice President and Senior Director of Merrill Lynch's Customized Investments Group. "With Biotech HOLDRs, investors now have a flexible, cost-effective way to diversify their investment in the biotechnology industry at costs that may be lower than investing through other vehicles."
Biotech HOLDRs are Merrill Lynch's second offering from their new, innovative HOLDRs(SM) investment platform. Two months ago Merrill Lynch introduced Internet HOLDRs (Amex: HHH, news, msgs), the first registered U.S. security to represent investors' undivided ownership rights in other U.S. securities. Approximately 3.7 million Internet HOLDRs were issued by Merrill Lynch on September 22, 1999 at a price of $108 1/4. Since its launch just two months ago, over 2.8 million additional Internet HOLDRs shares have been issued to investors. Today, more than 6.5 million Internet HOLDRs are outstanding and represent an aggregate market value in excess of $935 million. Like Internet HOLDRs, Biotech HOLDRs can only be traded, issued and cancelled in round-lots of 100 shares.
Biotech HOLDRs are depositary receipts issued by the Biotech HOLDRs Trust, for which The Bank of New York acts as Trustee. Unlike a mutual fund or UIT, Biotech HOLDRs represent an investor's undivided beneficial ownership interest in 20 of the largest and most liquid companies in the biotechnology industry measured by market capitalization and trading volume.
In July of 1998 Merrill Lynch launched its first HOLDRs product, Telebras HOLDRs (NYSE: TBH, news, msgs), with an initial market capitalization of more than $4.68 billion. Telebras HOLDRs represent investors' interests in 12 separate American Depositary Receipts. Since its inception, TBH has traded on average almost 1.7 million shares per day.
The specific share amounts underlying each round-lot of 100 Biotech HOLDRs are set forth in the chart below. The share amounts set forth below should not change except for changes due to corporate events such as stock splits or reverse splits on the underlying securities or reconstitution events.
Company Symbol Share
Amgen Inc. AMGN 46
Genentech, Inc. DNA 22
Biogen, Inc. BGEN 13
Immunex Corporation IMNX 14
PE Corp-PE Biosystems Group PEB 9
MedImmune, Inc. MEDI 5
Chiron Corporation CHIR 16
Genzyme Corporation GENZ 7
Gilead Sciences, Inc. GILD 4
Sepracor Inc. SEPR 3
IDEC Pharmaceuticals Corporation IDPH 2
QLT PhotoTherapeutics Inc. QLTI 5
Millennium Pharmaceuticals, Inc. MLNM 3
BioChem Pharma Inc. BCHE 9
Affymetrix, Inc. AFFX 2
Human Genome Sciences, Inc. HGSI 2
ICOS Corporation ICOS 4
Enzon, Inc. ENZN 3
Celera Genomics CRA 2
Alkermes, Inc. ALKS 2
An investor may obtain Biotech HOLDRs by purchasing them on the American Stock Exchange or by depositing with the Trustee the required share amounts of the 20 underlying biotechnology stocks and paying an issuance fee of up to $0.10 per HOLDR to the Trustee. Investors also may cancel their HOLDRs by presenting them to the Trustee and paying a cancellation fee of up to $0.10 per HOLDR to the Trustee in return for delivery to the investor of the 20 biotechnology stocks represented by the HOLDRs. The issuance and cancellation of HOLDRs is not a taxable event, and this mechanism will provide investors with investing and trading flexibility.
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