By Debbie Strickland

The initial public offering (IPO) market got off to its slowest start in a decade in January, with not a single biotechnology IPO closing during the month.

Finally, nearly a week into February, a biotech IPO closed, albeit for proceeds substantially less than anticipated. Vysis Inc. raised $36 million through the sale of 3 million shares priced at $12 each. Two other biotech IPOs--Ophidian Pharmaceuticals Inc., and Scriptgen Pharmaceuticals Inc.,-- also were expected to price last week. (For more information on January biotech financings read BioWorld Financial Watch, Feb. 9, 1998.)

First proposed in October 1997, the Vysis offering priced 7 percent below the assumed $13 per share, while the number of shares were shaved by 500,000. The change knocked down the gross proceeds 26.5 percent from the original projection of $49 million. Still, the firm boosted its cash more than 100-fold from its Sept. 30 level of about $300,000.

The underwriters--Furman Selz LLC, of New York; Deutsche Morgan Grenfell Inc., of New York; and Everen Securities Inc., of Chicago -- have an overallotment option of 450,000 shares that could add another $5.4 million to the gross.

Based in Downer's Grove, Ill., Vysis is a genomics diagnostics company that develops and markets diagnostics for cancer and pre-natal detection of genetic abnormalities. The firm also distributes over 240 research products in the U.S. and Europe, as well as marketing a line of genetic instrumentation workstations.

Its stock (NASDAQ:VYSI) closed Friday at $12.

Vysis now has 9.7 million shares outstanding, including 675,000 issued upon consummation of the IPO to its parent firm, Chicago-based Amoco Corp., in exchange for $8.1 million of indebtedness owed by Vysis. The company still owes $2.2 million to Amoco, which owns approximately 69 percent of Vysis' outstanding common stock.

The company's business represents the consolidation of multiple research units and programs of Amoco, which over 10 years has invested more than $80 million in Vysis' research and development in nucleic acid technologies. Vysis' new shareholders also gain a piece of the firm's rights to more than 90 issued and allowed patents.

With expected net proceeds of $32.3 million from the public offering, Vysis plans to accelerate product development, expand its sales and marketing capability, and acquire complementary technologies. It has a pipeline of nine clinical products under development and product collaborations with a number of medical research institutions, including the University of Chicago and the University of California at San Francisco.

Vysis also has an ongoing collaboration with Incyte Pharmaceuticals Inc., of Palo Alto, Calif., for genomic mapping of disease-related genes.

The firm's DNA-based diagnostic products use three complementary technologies: fluorescence in situ hybridization, or "FISH," which detects chromosomal abnormalities; the gCGH (comparative genomic hybridization) Array System, which detects gene defects within chromosomes; and the Molecular Lawn System, which zeroes in on specific gene sequence mutations.

Three of Vysis' FISH system products for leukemia and other myeloid disorders are currently cleared for clinical diagnostic use in the U.S., and one for prenatal testing is registered and marketed in France.

A breast cancer product, now in late-stage clinical trials, detects HER-2/neu gene amplification. The company also is seeking to develop tests for bladder, prostate and cervical cancers.

Through the first nine months of 1997, Vysis' revenues were up 36 percent to $12.2 million compared with the same period in 1996, while net losses declined 17 percent to $11.5 million. *

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