West Coast Editor

Fresh from a potential $505 million cancer deal with Pfizer Inc. in the much-watched field of Toll-like receptors, Coley Pharmaceutical Group Inc. is shooting for $115 million in its initial public offering, though the company did not specify in its prospectus the number of shares or the price per share.

The company plans to use the proceeds to expand its infectious disease program, widening the Phase Ib trials with Actilon - another TLR9 agonist designed to induce overproduction of interferon-alpha - against hepatitis C to test the compound in higher doses and differing schedules or forms of administration. IPO cash also would go toward new trials testing Actilon in combination with other drugs, and toward beefing up the product portfolio, as well as prosecution and maintenance of patents.

The deal with New York-based Pfizer gave Coley $50 million up front, in exchange for worldwide rights to the lead drug candidate ProMune, a TLR9 agonist delivered by subcutaneous injection. ProMune is in Phase II trials for several indications. (See BioWorld Today, March 25, 2005).

At the end of last year, Coley had about $23.2 million in cash, cash equivalents and marketable securities. So far, the firm has funded itself through proceeds of $145.6 million from private placements of preferred stock and warrants, $34.5 million in cash from commercial collaborations (including $20 million from vaccine-adjuvant deals) and $14.5 million from government contracts and grants.

Also, the company borrowed $6.8 million for improvements and equipment financing under a capital lease facility and has $2.1 million in debt related to funding for initial research and development.

TLRs, which appear on the surfaces of antigen-presenting cells, have been a subject of interest for scientists, who isolated them in Drosophila melanogaster, the fruit fly. The receptors recognize structures common to infectious agents and, when bound to them, trigger innate immune responses in the body. Another company working in the early stages with TLRs is New Haven, Conn.-based VaxInnate Corp., which raised $23.1 million in a Series B financing last year. (See BioWorld Today, March 12, 2004.)

Named for the Toll gene in Drosophila, the receptors help the insect fight fungal infections. When scientists noticed that the gene shares cytoplasmic sequences with the interleukin-2 receptor, its potential in humans became clear. Coley seized the opportunity - and Pfizer seized the rights to ProMune.

Coley intends to trade on Nasdaq under the symbol "COLY."

Underwriters for the IPO are Merrill Lynch; Pierce, Fenner & Smith Inc.; JPMorgan Securities Inc.; and Lazard Freres & Co. LLC, all of New York, along with Leerink Swann & Co., of Boston.