By Randall Osborne

As it sealed its fifth partnership deal to help discover new drug compounds, CombiChem Inc. registered for an initial public offering (IPO) of 2.25 million shares at between $11 and $13 per share.

San Diego-based CombiChem would raise $27 million, based on the mid-range price of $12 per share. After the offering, the company would have 13.16 million shares outstanding.

Given an overallotment option of 375,000 shares were the underwriters: Donaldson, Lufkin & Jenrette Securities Corp. and UBS Securities L.L.C., both of New York, and BancAmerica Robertson Stephens, of San Francisco.

CombiChem's latest collaboration is with South San Francisco-based Athena Neurosciences Inc., a wholly owned subsidiary of Elan Corp. P.L.C., of Dublin, Ireland. Together, they will work toward new drugs for Alzheimer's disease and other central nervous system conditions.

Under terms of the deal, CombiChem will get up-front and research support payments as well as milestone payments upon reaching specified goals. It also will receive royalties from sales of products developed and marketed by Athena, which retains exclusive worldwide rights to the products. No further terms were disclosed.

CombiChem, founded in 1994, is a computational drug discovery company that uses its technology to generate leads and optimize them by constructing libraries around those leads before identifying them as candidates.

For Athena, CombiChem will generate lead candidates. Athena has rights to use CombiChem's computer-designed collection of about 10,000 compounds.

In 1991, Athena licensed Zanaflex (tizanidine hydrochloride), an oral treatment for muscle stiffness and rigidity, from Basel, Switzerland-based Sandoz Pharma Ltd. Five years later, after the company received an approvable letter from the FDA for Zanaflex, Athena was purchased by Elan for more than $600 million. Sandoz since has merged with fellow Basel drug maker Ciba-Geigy Ltd. to form Novartis A.G.

As part of Athena's effort to eventually find drugs for Alzheimer's disease, the company has researched in mouse models the links between brain deposits of beta-amyloid peptide and Alzheimer's disease. (See BioWorld Today, Feb. 19, 1997, p. 1.)

CombiChem's other alliances include Sumitomo Pharmaceuticals Co. Ltd., of Osaka, Japan, which in August of this year signed a deal worth up to $17 million to CombiChem, in return for generating leads and launching the drug design cycle.

CombiChem also has partnerships with Teijin Ltd., of Osaka, Roche Bioscience, of Palo Alto, Calif., and Imclone Systems Inc., of New York. To date, the company has achieved milestones in none of its collaborative agreements.

Since it was founded more than three years ago, CombiChem has raised $31.3 million through private sales of equity securities. As of Sept. 30, the company had $8.40 million in cash, with a net loss of $3.66 million for the first nine months of 1997. *

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