By Randall Osborne

Inhale Therapeutic Systems Inc., which develops drugs that are delivered through pulmonary pathways, has priced its public offering of 1.5 million shares at $24.875 per share, which will raise $37.3 million for the Palo Alto, Calif.-based company.

When the company filed for the offering in early October, its stock sold at $32.375 per share, a price that would have raised $48.5 million.

After the offering, Inhale will have 15.26 million shares outstanding.

Inhale adapts injected or infused large peptides and proteins for delivery in dry powder form through the lungs and into the bloodstream. Inhale has 14 programs in development. Of these, five are in human clinical trials, and nine are sponsored by collaborative partners.

Pfizer Inc., of New York, is working with Inhale to develop pulmonary insulin. The program is in a multi-site Phase IIb in-home trial with up to 240 diabetics. Baxter Healthcare Corp., a subsidiary of Deerfield, Ill.-based Baxter International Inc., is sponsoring four non-peptide or protein drugs for inhalation delivery, one of which is in a Phase I clinical trial. Terms of the Pfizer deal, made in January 1995, were not disclosed. Baxter agreed in March 1996 to pay Inhale up to $80 million.

Also in a Phase I clinical trial is an osteoporosis drug, on which Eli Lilly and Co., of Indianapolis, is collaborating with Inhale. Lilly's deal, signed in January 1997, is worth up to $20 million.

Inhale is doing early-stage feasibility and preclinical research collaborations with Immunex Corp., of Seattle, on the interleukin-1 receptor for asthma; with Centeon LLC (a joint venture of Frankfurt, Germany-based Hoechst AG and Rhone-Poulenc Rorer Inc., of Collegeville, Pa.) on an alpha-1 proteinase inhibitor for genetic emphysema; and with Genzyme Corp., of Cambridge, Mass., on gene vectors for lung diseases.

As of September 30, Inhale had $57.65 million in cash, with a net loss of $6.99 million for the first nine months of 1997. The company's stock (NASDAQ:INHL) closed Friday at $27.25, up $2.25. *

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