ZICHRON YA'AKOV, Israel - Compugen Ltd., a pioneering Israeli bioinformatics company, raised $35.4 million in a private placement based on a company valuation of $151 million and two days later said it had filed with the U.S. Securities and Exchange Commission for an initial public offering expected to raise about $55 million.

The company plans to issue 5 million shares at $10 to $12 per share, and trade on the Nasdaq market under the symbol CGEN.

Lior Ma'ayan, Compugen vice president and general manager of Compugen's www.LabOnWeb.com, an online life science research engine, confirmed to BioWorld International the preliminary prospectus. "Compugen expects to net some $49.6 million in proceeds" to be "used in part for R&D but also for corporate development focusing on commercialization, sales and marketing." He also spoke about the $10 million of net proceeds that the company anticipates funneling into Novel Genomics, a newly formed subdivision to commercialize the genes and proteins Compugen has discovered.

Compugen, of Tel Aviv, Israel, and Jamesburg, N.J., develops technologies, software applications and algorithms to virtually decipher molecular biology questions, and to significantly enhance new drug discovery and biologically sound diagnostics and therapeutics. The company value has swung around full circle. In 1999, Compugen shot into the bioinformatics race by discovering and patenting more than 4,000 previously unknown human genes. At that time it was given an astronomical estimated market value of $350 million to $400 million by San Francisco-based Robertson Stephens Investment Bank, which had prepped the company to go public on Wall Street, but officials decided against that move, preferring to invest in proving their technology - a strategy that is paying off.

In March, the start-up won a multimillion dollar research contract and strategic collaboration with the giant toolbox company Human Genome Sciences Inc., of Rockville, Md. This and contracts with Pfizer Inc., the U.S. Patent and Trademark Office and others generated millions in income but also more millions in net losses because of the expenses in research.

The money raised privately this month is Compugen's third capital-raising round. In November 1998, the company raised $15 million.

"We anticipate continued increasing research and development as we move further into proteomics," Ma'ayan said. "But now we have validated our technology, not once, but in several collaborations with prominent players in the pharmaceuticals industry, and this justifies the substantial increase in the valuation since the previous funding round."

San Francisco-based Robertson Stephens will act as lead underwriter on the public offering with U.S. Bancorp Piper Jaffray, of Minneapolis, and Invemed Associates LLC acting as co-managers. They have a 30-day option to purchase another 750,000 shares to cover overallotments.

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