By Debbie Strickland

Seeking to capitalize on a six-month spate of good product news, GelTex Pharmaceuticals Inc. filed for a public offering that will gross $66.3 million if it prices at an assumed $26.50 per share.

The cash injection would more than double the Waltham, Mass., firm's reserves, which totaled $53.9 million on Sept. 30, 1997, following a nine-month net loss of $18.9 million.

The prospectus calls for the sale of 2.5 million shares, giving the firm 16.1 million shares outstanding. The underwriters — Cowen & Co., of Boston; CIBC Oppenheimer Corp., of New York; and Hambrecht & Quist LLC, of New York — have an overallotment option of 375,000 shares, which could add $10 million to gross proceeds.

At the assumed price, GelTex would net $62.3 million, or $71.7 million if the overallotment option is exercised in full.

The company plans to use the new cash for a variety of corporate purposes related to development and commercialization of its experimental products. If successful, the offering, plus existing sources of cash, will be sufficient to carry operations through "at least" 2000, according to the prospectus.

By then, the company could have its first product, RenaGel, on the market, with CholestaGel close behind. Both are oral drugs based on GelTex's core platform of non-absorbed, polymer-based substances that selectively bind to and eliminate target substances from the intestinal tract.

The company filed its first-ever new drug application (NDA) in November for RenaGel, potentially a $200 million-a-year product, analysts estimate. RenaGel controls the elevated phosphorous levels that occur in some 95 percent of dialysis patients.

It works by binding phosphate from the diet — primarily from proteins — in the intestine, thus preventing the phosphorous from reaching the bloodstream. RenaGel and the bound phosphate are later excreted from the body.

In June 1997, Genzyme Corp., of Cambridge, Mass., signed on as the lead partner for RenaGel, making a $2.5 million equity investment in GelTex and agreeing to pay $25 million in milestones. The companies formed RenaGel LLC, a 50-50 joint venture with worldwide rights, except for Japan and the Pacific Rim, which are covered under an earlier agreement with Chugai Pharmaceutical Co. Ltd., of Tokyo.

Meanwhile, GelTex has taken what could be an even more lucrative product — CholestaGel for lowering cholesterol — to the Phase III level of clinical testing.

CholestaGel binds and removes bile acids from the intestinal tract. This activity stimulates the liver to remove cholesterol from the bloodstream to reduce bile acids. Though the company will first pursue FDA approval of CholestaGel as a monotherapy, the future may bring a fixed-combination use with the most widely prescribed class of systemic cholesterol-lowering drugs, HMG co-A reductase inhibitors, also called statins, which account for about half the cholesterol-reduction pharmaceutical market.

Two Phase III trials are slated for completion by the end of 1998, with a new drug application to follow in mid-1999, if all goes well.

At the preclinical end of GelTex's pipeline, two programs targeting obesity and infectious diseases are under way.

To fight obesity, non-absorbed polymers can be used either to bind and inhibit pancreatic lipase — the enzyme responsible for the breakdown of fat — or to bind fat itself, making it inaccessible to the enzyme.

The infectious disease program is applying the polymer technology to treat nonsystemic infections at surface sites, including gastrointestinal, genitourinary, skin and wound sites and respiratory tract infections.

The company first demonstrated feasibility in infectious disease by aiming its polymers at Cryptosporidium parvum and rotavirus, but opted not to pursue full-scale development in those indications due to the introduction of efficacious therapies by other companies.

Shares in GelTex (NASDAQ:GELX) closed Friday at $26.25, down $1.25. *