Genomics and bioinformatics specialist Lion Bioscience AG, of Heidelberg, Germany, is looking to raise up to EUR201.3 million (US$191 million) in what could be the largest German biotechnology initial public offering this year.

Shares are due to commence trading on Nasdaq and on Frankfurt's Neuer Markt on July 26. Excluding overallotments, the company is offering 4,575,375 American depository shares, priced at EUR37 to EUR44 each. The midpoint of this spread is equivalent to net proceeds of EUR185.3 million.

Morgan Stanley Dean Witter & Co., of New York, is global coordinator and book-runner for the transaction, while Deutsche Bank AG, of Frankfurt, Germany, is joint lead manager. The company aims to use most of the cash for general corporate development, although it said "a small portion of the proceeds of the offering will be used to repay short-term debt."

CEO Friedrich von Bohlen und Halbach established Lion Bioscience in 1997 along with a team of scientific co-founders from the European Molecular Biology Laboratory (EMBL) in Heidelberg, including Reinhard Schneider, Georg Casari, Hartmut Voss, Wilhelm Ansorge, and Peer Bork. Thure Etzold from the European Bioinformatics Institute in Hinxton, UK, joined the team in mid-1998. Etzold, who invented the company's SRS database query and navigation system for searching sequence databases, is now managing director of its Cambridge, UK, subsidiary, Lion Bioscience Ltd. Its U.S. subsidiary, Lion Bioscience Research Inc., is based in Cambridge, Mass.

Lion Bioscience has not undergone any venture capital funding in its three-year history. It was established with DM 4.5 million (US$2.2 million) funding from its founders. A five-year target identification and validation alliance it signed with Bayer AG, of Leverkusen, Germany, in June 1999, which potentially is worth US$100 million, has been a second source of cash. As part of the deal, Bayer took an undisclosed equity stake in the company, in addition to paying fees for the use of Lion's software, costs associated with establishing the company's U.S. subsidiary - which is performing the work - and royalties on any products emerging from the alliance. The EMBL is also a shareholder, through its technology transfer subsidiary.

Lion's other partners and customers include Boehringer Ingelheim, of Ingelheim Germany; Genias Software GmbH, of Neutraubling, Germany; Pharmacia Corp., of Peapack, N.J.; and Paradigm Genetics Inc., of Research Triangle Park, N.C. The company, which has 230 people on its payroll, posted EUR9.7 million in sales for the fiscal year ended March 31.

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