SYDNEY - The new Australian biotech company Metabolic Pharmaceuticals Ltd. intends to start Phase I trials of its anti-fat compound in May 1999, after six or seven months of preclinical toxicity testing, according to the company's prospectus.

The prospectus issued for Melbourne-based Metabolic's initial public offering to raise A$8 million (US$4.7 million) to A$12 million says the Phase I study will test 20 to 100 healthy volunteers.

Metabolic's managing director, Chris Belyea, said it should be possible to tell something about the likely effectiveness of the compound as well, by testing for the amount of compound present in blood in the Phase I volunteers. The more in the blood, the more likely it is to be effective, he said.

Metabolic - a separate, one-project company spun out of Circadian Technologies Ltd. - will develop a reengineered fragment of the human growth hormone that can be taken orally. The fragment, developed at Monash University, in Melbourne, and known as AOD9401, has shown considerable promise in animal trials in accelerating the action of enzymes that burn up fat cells.

Belyea said initial response to presentations and advertising of the prospectus has been very encouraging, especially given the current soft Australian market for small companies.

The prospectus is for the issue of 40 million shares at A$0.20 each (A$8 million total), with provision for another $4 million worth of oversubscriptions. Metabolic is expected to list on Oct. 26. *