By Brady Huggett

Telik Inc. filed to test public waters, registering 4 million shares with the SEC for estimated maximum net proceeds of about $37.3 million, excluding the overallotment option.

The offering is being managed by Lehman Brothers Inc., of New York; Legg Mason Wood Walker Inc., of Baltimore; UBS Warburg LLC, of Stamford, Conn.; Lazard Freres & Co. LLC, of New York; and Needham and Company Inc., of New York. The underwriters have an option to purchase 600,000 additional shares.

The maximum proceeds are based on an estimated public offering price of $10 per share. Telik¿s stock (NASDAQ:TELK) gained $1.05 Monday to close at $10.25.

As of June 30, Telik had a cash position of $36.2 million. After the offering, it will have about 26.9 million shares outstanding. The South San Francisco-based company posted a net loss of approximately $4.4 million for the second quarter, or about 19 cents per share.

In its prospectus, Telik proportioned the proceeds mainly to its compounds, TLK286 and TLK199, and its family of orally active insulin receptor activators. The company foresees $15 million to $20 million being funneled into TLK286 ¿ enough, it said, to get the product through Phase II development. TLK199 and the insulin receptor activators will be allocated anywhere from $10 million to $15 million ¿ sufficient funds to finish preclinical work and initiate Phase I studies. The remainder of the proceeds will be spent on research and development and general corporate purposes, Telik said in its prospectus.

The small-molecule drug candidate TLK199 is being developed to increase white blood cell levels to treat conditions such as chemotherapy-induced neutropenia and myelodysplastic syndrome. The compound acts upon signaling pathways that are involved in the replication and differentiation of white blood cells.

TLK286, Telik¿s first compound to enter human trials, has shown activity against tumors and tumor cells, especially those resistant to many chemotherapeutic agents. It becomes cytotoxic when encountering a glutathione S-transferase enzyme (GST P1-1). GST P1-1 is elevated in many solid tumors, such as ovarian cancer, non-small-cell lung cancer, melanoma and colorectal cancer. The company has Phase II trials ongoing in advanced non-small-cell lung, ovarian and colorectal cancer.

Telik joined the fraternity of public companies about a year ago, selling 5 million shares at $7 per share in its initial public offering, pulling in $35 million. (See BioWorld Today, Aug. 16, 2000.)