By Debbie Strickland

Associate

NeoPharm Inc. is seeking to raise more than $55 million in its first public offering since moving from the Amex to the Nasdaq exchange in April.

The 2.8-million-share offering would raise $60.2 million at NeoPharm's Thursday closing price (NASDAQ:NEOL) of $21.50, which was up $2.125, or 11 percent, on the day. The offering also would more than triple the company's cash level, which stood at $25.3 million on June 30.

A stockholder is selling an additional 200,000 shares and underwriters Prudential Vector Healthcare and U.S. Bancorp Piper Jaffray have an overallotment option for an additional 450,000.

If the offering is completed, NeoPharm will have 13.9 million shares outstanding. The offering thus represents about 20 percent of the Bannockburn, Ill.-based company, or about 16.5 percent if all outstanding options (including the underwriters' overallotment option) are exercised.

With net loss usually running between $1 million and $2 million per quarter, the financing would be a substantial one for NeoPharm, which aims to use the money to advance a slate of anticancer products through development and commercialization, in addition to funding other operating and capital expenses and possible acquisitions of complementary technologies.

NeoPharm's drug portfolio is based on two platforms: an electrostatic liposome drug delivery platform and a tumor-targeting fusion protein platform. The liposome products are the most advanced, landing a lucrative February 1999 deal with Pharmacia Corp. as worldwide development and marketing partner for liposome-encapsulated versions of paclitaxel and doxorubicin, which are both in Phase II/III clinical trials for various cancers.

Pharmacia assumed all responsibility for clinical development and testing, allowing NeoPharm to focus on other products. To date, Pharmacia has paid $22 million of a potential $69 million in milestones, in addition to making an $8 million equity investment. The assumption of clinical trial costs, however, is the more valuable part of the deal - amounting to more than $100 million. The deal came at a crucial time for NeoPharm, which ended 1998 with less than $1 million in the bank. (See BioWorld Today, Feb. 23, 1999, p. 1.)

At the earlier end of the pipeline, NeoPharm this summer filed an investigational new drug application to begin clinical trials of its fifth anticancer product in two years, this time for a liposome-encapsulated antisense oligonucleotide (LE-AON) against the c-raf-1 oncogene for patients with radiation-resistant solid tumors. According to the company, LE-AON is the first product to deliver antisense oligonucleotides in liposomes.

Products from the fusion protein technology platform also have reached the clinic. These drugs consist of two parts, a tumor-targeting mechanism and a cytotoxic agent called PE 38. The lead product, now in Phase I/II trials, pairs PE38 with interleukin-13. A second fusion product, pairing the cytoxin with a mesothelin monoclonal antibody called SS1(dsFv), is expected to enter Phase I/II trials by the end of the year.