ZICHRON YAAKOV, Israel - Nes Ziona-based QBI Enterprises Ltd., a bioinformatics company specializing in gene data mining, is preparing an initial public offering on Nasdaq sometime in the autumn based on a company valuation of $500 million to $600 million, according to Juliana Friedman, QBI vice president of business development.

It is another case of Israeli research moving to the U.S. The company, founded in Israel, is registered as Quark Biotech Inc. (QBI) in Pleasanton, Calif., and retains its research facility in Israel.

Friedman said the valuation comes from comparison with other companies developing genetic-based medicines that trade on the American stock market, based on criteria such as proof of concept, presentation of technological platforms, company progress in meeting landmarks and contracts with pharmaceutical companies that fund joint research - for QBI that includes Perkin-Elmer's Princeton Applied Research in Oak Ridge, Tenn.; Mitsubishi Chemical Group, of Tokyo; and Invitrogen, Inc., of Carlsbad, Calif.

QBI has developed a gene-discovery platform that allows the identification and selection of critical genes responsible for pathogenesis with targeted drug development. The company has been working on a means to prevent the debilitating, even lethal side effects of chemotherapy or radiation against cancer by blocking p53-mediated non-specific killing of normal healthy cells, a co-discovery with the University of Illinois at Chicago (UIC). QBI holds a license to commercialize new applications of joint discoveries with UIC, while the university holds the patents.

The system is in clinical trials at the Sloan-Kettering Memorial Cancer Research Center in New York, funded by the U.S. National Cancer Institute. Friedman estimated QBI would be ready with its initial product no sooner than 2003-04.

Founded in Israel in 1994 by chemist Daniel Zurr, who is QBI president and CEO, the company envisions selling 15 percent to 20 percent of its shares, hoping to raise some $100 million. QBI has been well capitalized, with tens of millions of dollars coming from its chairman and majority shareholder Lawrence Ellison, founder, chairman and CEO of the software giant Oracle.

Israel is no stranger to foreign investments. Last week, Nomura Securities Co. Ltd., Japan's largest brokerage house, announced plans to open an office here and step up its involvement in local start-ups. According to Senia Rapisarda, head of investment in communications and high-tech of the London-based subsidiary, Nomura International plc, the company has been in the Israeli market for three years, including investments in Rehovot-based XTL Pharmaceuticals Ltd. (which decided against mounting its IPO just now).

"Nomura now will increase its investments, most of which are in Internet and software, and also offer expertise in global marketing with a significant push into the Asian and European markets," Rapisarda said. This is to make up for "Israel's notoriously poor marketing skills" that are being corrected in part by local venture capital companies, such as Israel Seed Partners and Delta Ventures, with which Nomura has strong connections, she said.

Not to be left out of its own back yard, some of the leading private investors in Israel have united with a $25 million capitalization to form yet another private investment firm, Herzliya-based Aria Ventures, which will be devoted to high-tech, especially companies developing software and hardware for communications and information technology, but "not ignoring opportunities in biotechnology," said Shuki Gleitman, former chief scientist of the Ministry of Industry and Trade (MoIT), under which Israel's technological incubator program was initiated.

Gleitman, now CEO of SFKT Technologies, which has invested 25 percent of the initial $25 million, said the group intends to raise some $125 million, primarily in Israel, "using the investment firm format to give the company more flexibility than the venture capital fund structure."

Also last week, the Finance Ministry asked the Ministry of Industry and Trade to reconsider the need for government subsidies for research and development in the context of discussions by a joint committee of revisions to the law governing these subsidies. The committee is headed by State Budget Director David Milgrom and new MoIT Chief Scientist Carmel Vernia.

Considering the intense investment in IT and Internet by private investors, the Finance Ministry said a fundamental discussion about continuing government subsidization is warranted, noting that some areas, such as biotechnology, where investment is lagging behind the virtual and dot-com investments, could benefit by narrowing government definition of eligible sectors.

The joint committee anticipates presenting draft recommendations for an altered R&D subsidies law by Nov. 1.

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