GalaGen Inc., which is developing antibodies derived from cow'smilk, is proposing the sale of 2 million shares in an initial publicoffering.

The Arden Hills, Minn., company hopes to gross between $22million and $26 million with the shares expected to be pricedbetween $11 and $13 each. Montgomery Securities, of SanFrancisco, and A.G. Edwards & Sons Inc., in St. Louis, are managingthe offering.

After the offering the company would have nearly 6.7 million sharesoutstanding. The underwriters have an option to purchase 300,000shares to cover overallotments.

GalaGen was formed in 1991 as a spin-off from the dairycooperative, Land O'Lakes Inc., and works out of the same facility.GalaGen, with access to Land O'Lakes' 250,000 cows, shouldn'thave any problem securing colostrum (the milk from the first fewmilkings of a dairy cow after its calf is born), the source for itspolyclonal antibodies. Land O'Lakes, the largest GalaGenshareholder, will have its position reduced from about 23 to 16percent in the offering.

GalaGen is developing oral therapeutics to treat a range ofgastrointestinal (GI) diseases. It is producing antibodies designed tospecifically target pathogens in the GI tract.

The lead product is Sporidin-G, a polyclonal antibody targetingCryptosporidium parvum, which leads to chronic life-threateningdiarrhea in immunocompromised patients. GalaGen has approval toconduct a double-blind, placebo-controlled Phase II trial of Sporidin-G in 90 C. parvum patients.

GalaGen last year licensed rights to Chiron Corp.'s adjuvanttechnology, MF-59, to enhance the levels of C. parvum-specificantibodies and the potency of other drug candidates. Productincorporating the Chiron technology will be used in the Phase IIstudy.

Chiron, of Emeryville, Calif., has warrants to purchase about 710,000GalaGen shares at an average price of $10.94. Separately, thecompanies are working together on developing bovine antibodytreatments for Helicobacter pylori, a bacterium that causes ulcers andgastritis.

As of Dec. 31, 1995, GalaGen had about $509,000 in cash andequivalents. It lost nearly $5.5 million in 1995 and a similar amountin 1994. The name GalaGen came about because "gala" is the Greekword for milk. The company is proposing trading on NASDAQ underthe symbol GGEN. n

-- Jim Shrine Staff Writer

(c) 1997 American Health Consultants. All rights reserved.