By Kim Coghill

Washington Editor

AeroGen Inc. raised $43.2 million through an initial public offering of 3.6 million shares at $12 per share.

The net proceeds should total about $38.7 million, somewhat lower than the company anticipated when it proposed the shares at $13 to $15 apiece.

"I think the uncertainty of the election caused some problems in the market," said Jane Shaw, chairman and CEO of Sunnyvale, Calif.-based AeroGen. "Timing is important and we anticipated various outcomes to the election and what the impact might be on pricing. But we had not anticipated the outcome in which we are living."

AeroGen's stock (NASDAQ:AEGN) closed unchanged Friday at $12.

AeroGen has 19.4 million outstanding shares and has not disclosed its major shareholders. Chase H&Q served as the lead underwriter and CIBC World Markets Corp. and SG Cowen Securities Corp. were co-underwriters.

Proceeds from the IPO will be used to fund research, development and clinical activities, manufacturing and commercialization of existing and future products, capital expenditures and general corporate purposes.

Shaw said AeroGen had raised $52.7 million privately before the IPO. Before the IPO, the company had $20 million in cash available.

Founded in 1991, AeroGen specializes in the development and manufacture of pulmonary drug delivery products. The company's core technology consists of a proprietary aerosol generator, which delivers a predetermined particle size when incorporated into AeroGen's inhaler or nebulizer platform. Initial products focus on treating asthma, chronic obstructive pulmonary disease (CODP) and cystic fibrosis. They are designed to improve treatment for patients using nebulizers and those receiving therapy via ventilators.

The company's lead product, AeroNeb, a hand-held nebulizer, is targeted for launch in the first half of 2001.

AeroGen in March signed an agreement with Seattle-based PathoGenesis Corp. to develop a small, hand-held AeroDose inhaler to deliver TOBI, an inhaled tobramycin treatment for cystic fibrosis. A Phase I trial began in July.

PathoGenesis, which in August was acquired by Chiron Corp., has exclusive worldwide rights to commercialize the inhaled TOBI. PathoGenesis invested $2.5 million in convertible preferred stock as part of the March agreement. (See BioWorld Today, Aug. 14, 2000.)

Other than respiratory therapy, AeroGen is developing the AeroDose inhaler for systemic drug delivery. The product will deliver insulin to treat diabetes and has completed its first clinical trial. Phase II trials are expected to begin this year.

In May, AeroGen entered an agreement with Franklin Lakes, N.J.-based Becton, Dickinson and Co. in which the latter will develop and supply a patient-adjustable container for use in the AeroDose insulin product.

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