By Matthew Willett

Discovery Partners International Inc. (DPI), of San Diego, raised $90 million in an initial public offering of 5 million shares of common stock at $18 per share. The shares priced above the expected range of $15 to $17.

The company netted $82.5 million in the IPO and now has enough operating cash to last at least through 2001. The underwriters of the offering - Chase H&Q, Lehman Brothers and UBS Warburg LLC, all of New York - have an overallotment option for an additional 750,000 shares.

According to SEC filing documents, DPI plans to use the proceeds to fund operations, research, technology acquisition and personnel costs. The company may also use proceeds for facility expansion.

DPI's shares began trading last Thursday on the Nasdaq National Market under the symbol DPII. The stock has hovered close to the offering price, closing Monday at $18. Following the offering, DPI has 22.4 million shares outstanding and a market capitalization of just over $400 million.

The company was founded in 1995 as Irori and changed its name in 1998. DPI has positioned itself to serve customers and partners after the identification of a drug target and before clinical testing.

The company's product and service offerings include chemical compound libraries; instruments and consumables for automating the process of making compound libraries; software and algorithms to generate compound libraries and perform other functions to enhance drug discovery; and contract services for testing, screening and optimizing of drug candidates.

Proprietary technology includes the NanoKan System, which, upon complete development, is expected to generate up to a million discrete compounds a year.

In 1999, DPI acquired Discovery Technologies Ltd., of San Diego, for $5 million to provide assay development and ultra-high-throughput screening services. Earlier this year, DPI completed the acquisition of Axys Advanced Technologies, of South San Francisco, Calif., for 7.4 million shares of common stock, $50,000 and a promissory note. Axys Advanced was the combinatorial chemistry arm of Axys Pharmaceuticals Inc.

DPI also acquired Structural Proteomics, expanding compound libraries and software services capabilities, through a purchase of stock totaling 75 percent of Structural Proteomics' shares outstanding for $1 million and 150,000 shares of DPI. (See BioWorld Today, May 11, 2000, p. 1.)

DPI has served more than 100 customers, including Bristol-Myers Squibb Co., of New York; Aventis Inc., of Frankfurt, Germany; and Pfizer Inc., of New York (the original agreement was with Warner-Lambert Co., which has since merged with Pfizer).

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