By Matthew Willett

Array BioPharma Inc. priced its 6.5-million-share initial public offering at $7.50 per share for proceeds of $48.75 million, funding the company said it will use for operating expenses and development costs.

Though the offering included 500,000 shares more than estimated, it garnered the company about $17.25 less than expected when it filed in September and sought $10 to $12 per share. (See BioWorld Today, Sept. 19, 2000.)

The stock (NASDAQ:ARRY) gained $1.25, or 17 percent, Friday to close at $8.75.

Co-lead managers are Lehman Brothers Inc. and Deutsche Banc Alex.Brown, and Legg Mason Wood Walker Inc. is co-manager. They have an overallotment option on another 800,000 shares.

The Boulder, Colo.-based company is focused on discovery research, providing services in chemistry, high-throughput screening, structural biology and information management.

Its trademark technology centers on Optimers - drug-relevant building block sets designed to explore structure-activity relationships of leads.

The company recently expanded its existing agreement with Merck & Co. Inc., of Whitehouse Station, N.J., to continue designing and synthesizing lead-generation libraries for Merck's drug discovery activities, and Array and ICOS Corp., of Bothell, Wash., in August expanded their previous drug discovery collaboration, also entering into a process research and manufacturing agreement.

In May, Array and Tularik Inc., of South San Francisco, agreed to design and synthesize a small-molecule-focused library targeting orphan nuclear receptors, and Eli Lilly and Co., of Indianapolis, has 30 Array scientists working alongside its own on several drug discovery projects.

The completion of the offering drops Array ownership for its directors and executives, formerly 51 percent stakeholders, to about 38 percent.

Array has about 21.4 million shares outstanding.