By Randall Osborne

West Coast Editor

Ista Pharmaceuticals Inc. filed for an initial public offering that aims to raise $86.25 million for its work with hyaluronidase products, particularly Vitrase for severe vitreous hemorrhage, which is in two Phase III trials.

Irvine, Calif.-based Ista, formerly Advanced Corneal Systems, also recently began a pilot Phase IIa clinical trial of Vitrase in Mexico for diabetic retinopathy, the leading cause of blindness in adults in the U.S.

The company did not specify number of shares or anticipated price in its registration with the Securities and Exchange Commission. A spokesperson for the company said she could not comment because of the ¿quiet period¿ rule imposed by that agency.

As of Dec. 31, the company had $709,000 in cash. But, on a pro forma basis, reflecting Ista¿s acquisition last month of Singapore-based Visionex and the sale of $10.0 million of Series D preferred stock to Allergan Inc., also of Irvine, in March 2000, Ista had cash and cash equivalents of $15.1 million at the end of last year, showing a net loss of $14.28 million for the year.

Visionex has been conducting a Phase II clinical trial of Vitrase in Singapore, and was a related party through common ownership by some of Ista¿s stockholders. Ista said it plans for Visionex to continue the trial.

Ista has a collaboration with Allergan, under which the latter will be responsible for the marketing, sale and distribution of Vitrase in the U.S. and all international markets, except Mexico and Japan.

Proceeds from this offering, combined with existing cash, are enough to support operations for at least the next two years, the company said.

Hyaluronidase is a naturally occurring enzyme, of which Ista uses a highly purified form to develop treatments for ophthalmic conditions.

Another Ista product, Keratase, targets corneal opacification, in which the cornea becomes cloudy and the amount of light entering it is diminished. The currently accepted treatment for the condition is a corneal transplant. Ista plans to begin a Phase IIb trial of Keratase in the second half of this year.

The company is also developing a treatment system called Keraform for keratoconus, a vision-impairing degenerative disease that involves thinning of the cornea with a cone-like malformation.

Ista has applied for Nasdaq trading under the symbol ISTA. Lead underwriter for the offering is CIBC World Markets Corp., of New York.