NeXstar Pharmaceuticals Inc. has agreed to issue morethan 750,000 shares to stockholders of privately heldSupragen Inc., a three-year-old start-up company focusingon T cell mediated diseases, in a takeover valued at about$11 million.

Supragen, of Lakewood, Colo., was founded in 1992 andbased its drug research efforts on identification ofsuperantigens that mediate the immune system's T cellresponses. While some superantigens stimulate T cells,others shut them down.

The existence of superantigens, which affect largenumbers of T cells, were discovered by Supragen'sfounding scientists _ Brian Kotzin, John Kappler andPhilippa Marrack, all of the National Jewish Center ofImmunology and Respiratory Medicine in Denver. Thethree will remain as consultants to NeXstar.

Based on the $14.75 closing price for NeXstar's stock(NASDAQ:NXTR) Wednesday, the takeover is worth$11.1 million. Supragen's shareholders will receive753,425 NeXstar shares. The Boulder, Colo.-basedNeXstar, as of June 30, 1995, had 23 million sharesoutstanding and more than $43 million in cash andreceivables. The company reported a net loss for the firsthalf of 1995 of $9.4 million. NeXstar closed Wednesdayup 38 cents.

Joseph Alper, NeXstar's director of corporatecommunications, said none of Supragen's drug discoveryefforts has progressed to clinical trials. The company hasfocused much of its efforts on inhibiting T cell responsesthat trigger autoimmune diseases, such as lupus andrheumatoid arthritis.

The acquisition, Alper said, will enable NeXstar toexpand its immunology programs and the company'scombinatorial chemistry capabilities will enableSupragen's scientists to test compounds that affect T cellresponses.

Supragen, which has the expertise in T cell receptors andsuperantigens, "faced the problem of how to come upwith compounds to shut down the receptors," Alpernoted.

The two companies got together through the efforts ofNew York-based venture capital firm, E.M. WarburgPincus & Co., which is Supragen's largest shareholder.Warburg Pincus also provided the initial funding forBoulder-based NeXagen Inc., which merged last yearwith San Dimas, Calif.-based Vestar Inc. to formNeXstar.

Supragen has 24 employees and all will be relocated toNeXstar's Boulder facilities. No layoffs are planned,Alper said. Supragen's president, Michael Burke, willjoin NeXstar as vice president of business development.

NeXstar's president and CEO, Patrick Mahaffy, said in aprepared statement that adding Supragen's employeeswill increase NeXstar's research and developmentexpenses in the short-term, but won't have a long-termeffect because the company was planning to expand itsstaff in the immunology area.

For the first six months of this year, NeXstar spent $17.2million on research and development.

NeXstar's lead products, AmBisome and DaunoXome,are liposomal formulations of the antifungal agent,amphotericin B, and the chemotherapeutic drug,daunorubicin, respectively. AmBisome is marketed in 16countries outside the U.S. DaunoXome, which is on themarket in Sweden, received an approvable letter from theFDA in July and could receive market clearance this fall.

For the first half of 1995, NeXstar reported product salesof $26.2 million, mostly from AmBisome, and totalrevenues of $28.6 million. n

-- Charles Craig Staff Writer

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