National Editor

Anadys Pharmaceuticals Inc. filed to raise as much as $86.25 million in an initial public offering, aiming to use between $35 million and $40 million of the proceeds to advance its pair of lead products for hepatitis C - isatoribine (ANA245) and the oral prodrug of isatoribine (ANA971) - as well as other HCV and antibacterial compounds.

The number of shares to be offered, all sold by the San Diego-based company, has not been disclosed. Anadys, which is in a quiet period in accordance with SEC rules, hopes to trade on Nasdaq under the symbol "ANDS."

ANA245, the company's nucleoside analogue believed to interact with Toll-like receptor 7, or TLR7, on certain immune system cells, had been administered to 39 subjects as of Oct. 31, including 19 chronic HCV patients. A Phase Ib trial is under way in which the drug has shown favorable safety and tolerability, as it did in the Phase Ia trial, Anadys said.

The company added that, although efficacy is not a stated objective of the Phase Ib trial and the number of patients was small, results did show strong biological activity and viral load reduction at multiple doses. Scientists plan to experiment with longer treatment durations and fewer doses per week.

Near the start of next year, Anadys - which retains worldwide rights to develop and commercialize ANA245 - expects to launch a Phase I/II trial testing the drug in combination with interferon-alpha in selected HCV populations. The oral prodrug ANA971 is expected to enter Phase I trials in 2004, too.

In lead optimization and animal studies is a series of antibacterial compounds designed to treat serious infections, including those resistant to current therapies, the company said.

As of Sept. 30, the company had about $11.4 million in cash, cash equivalents and securities available for sale, according to its prospectus. Anadys' intellectual property portfolio consisted of 36 patents issued in the U.S., 70 foreign-issued patents and about 145 patent applications pending worldwide.

The rest of the IPO proceeds would be used for general corporate purposes. New York-based underwriters for the offering are Lehman Brothers; SG Cowen Securities Corp.; Legg Mason Wood Walker Inc.; and Needham & Co. Inc., along with U.S. Bancorp Piper Jaffray, of Minneapolis.