For only the second time in the U.S. this year, a biotech company has filed to go public - Advancis Pharmaceutical Corp. filed for an initial public offering in an effort to raise an estimated $86.25 million.

The Germantown, Md.-based firm has not set a price range or number of shares for the offering. Advancis, which proposed the symbol "AVNC" for the Nasdaq exchange, plans to use the funds for research and development activities related to its antibiotic pipeline, for purchases of capital equipment, for licensing activities and for other general corporate purposes.

The offering's underwriters are Lehman Brothers Inc., of New York, and Pacific Growth Equities LLC, of San Francisco.

According to BioWorld Snapshots, only one other company in the sector has filed to go public this year - ViaCell Inc., a Boston-based company developing a stem cell expansion technology. Filed in January, the proposal to sell $115 million worth of stock remains pending. Last year, five biotech IPOs were completed, half the 2001 total.

In comparison, 83 biotech companies went public in 2000. But Advancis' decision to go public could signal a sign of things to come.

"The environment is clearly improving, and we would expect to see a number of companies step out this fall as investors are clearly looking for new avenues of investment," Jennifer Chao, an analyst with RBC Capital Markets in New York, told BioWorld Today. "I think we can expect to see maybe some recovery from the dry spell that we have seen over the last 12 to 18 months."

She said companies and investors are eyeing better expectations for future share values, pointing to recent all-cash acquisitions on the part of large-cap companies, rather than stock swaps, as the buyers have deemed their shares "too valuable to parlay into some of these acquisitions." An example would be Monday's announcement that Genzyme Corp., of Cambridge, Mass., is planning a $600 million purchase of SangStat Medical Corp., of Fremont, Calif.

At the same time, favorable terms of convertible notes have allowed companies to finance such transactions or bolster cash reserves at good rates.

"The overall sector has shown very nice strengthening fundamentals, and that provides a very optimistic background for new public issuances as well as acquisitions and other corporate money-raising activities," Chao added. "I think the real impetus for these acquisitions and the IPO activity we could be seeing is the recognition that investors are very much focused on top- and bottom-line growth. They are focused on seeing realizable, profitable earnings, which clearly is a more progressive step than where we were 12 to 18 months ago."

Over five rounds of private financing, Advancis has secured $28.5 million in funding.

The company's current institutional ownership includes Princeton, N.J.-based Healthcare Ventures LLC, which controls about 55 percent of its shares before the offering; New York-based Bear Stearns Health Innoventures, with control of about 15 percent of Advancis; and New York-based Rho Management Trust, which has a stake of about 6 percent. Company founder and CEO Edward Rudnic also owns about 6 percent of the shares.

Since it was founded in December 1999, Advancis has yet to record any revenue and last year reported a net loss of $14.1 million.

The 55-employee company is focused on infectious disease through products developed on its Pulsys delivery technology. Its portfolio is based on pulsatile drug delivery, resulting in products that expose their antibiotic properties to bacteria in front-loaded, sequential bursts, or pulses. Advancis said in its filing the method kills the bacteria more efficiently and effectively than those exposed to standard antibiotic treatment regimens.

The company said its research showed that antibiotics are more bactericidal when released in three to five pulses that each occur within the first six to eight hours following initial dosing.

Its initial focus centers on developing pulsatile formulations of approved and marketed drugs that no longer have patent protection or that have patents expiring in the next three years. Advancis said such products would have multiple therapeutic advantages over available antibiotics, such as improved efficacy, reduced resistance, less side effects, once-daily dosing, shorter treatment periods and increased bioavailability.

Advancis recently entered a collaboration with London-based GlaxoSmithKline plc for the development, manufacture and sale of a pulsatile version of its antibiotic Augmentin, which last year generated U.S. sales worth more than $1.5 billion.

In its pipeline, the company has three pulsatile drugs in Phase I/II trials and five in late-stage preclinical development. Advancis said early clinical results have shown that its technology delivers amoxicillin, clarithromycin and metronidazole, with additional trials under way to fine-tune dosing profiles of the three products.

Advancis also is developing a non-pulsatile, generic formulation of Biaxin XL. The drug's patent expires in 2005.