By Frances Bishopp

Reflecting recent sparks of renewed investor interest in the biotechnology sector, Aurora Biosciences Corp. completed an initial public offering (IPO) selling 4 million shares at $10 per share, and could generate a total of $46 million if overallotment options are exercised.

The La Jolla, Calif.-based company filed for the IPO in March 1997 proposing to offer 3 million shares at a price between $9 and $11.

Underwriters Alex. Brown & Sons Inc., of Baltimore, and Hambrecht & Quist LLC and Robertson, Stephens & Co., both of New York, have options to purchase another 600,000 shares to cover overallotments.

Stocks in the biotechnology sector have risen significantly since late April. The NASDAQ Biotech Index jumped about 30 points from April 25 to May 30 and the BioWorld Stock Indicator soared 50 points during the same period. (See BioWorld Financial Watch, June 9, 1997.)

Aurora, which focuses on mammalian cell-based screening for new therapeutics, has collaborations with Bristol-Myers Squibb Co., of New York, ArQule Inc., of Medford, Mass., Alanex Corp., of San Diego, Allelix Biopharmaceuticals Inc., of Canada, Roche Bioscience, of Palo Alto, Calif., and Sequana Therapeutics Inc., of La Jolla.

Kevin Kinsella, president and CEO of Sequana, said the IPO represents the first time this year an offering has been expanded "so much" in size and the first offering that has been within the proposed price.

"It's a double-whammy," Kinsella said. "The deal was expanded by 33 percent. This company has come so far and so fast under terrific management and scientific leadership that its technological capabilities have so impressed the big pharmaceutical industry that they have rapidly done a number of deals and are on track to do several more."

First came genomics companies uncovering potentially enormous numbers of new targets for drug discovery, Kinsella explained. Combinatorial chemistry companies created the small molecule libraries in vast quantities to screen against these targets, he continued.

"In order to get the two of those together," Kinsella added, "you needed an ultra-high-throughput screening system, which is exactly what Aurora is bringing to the table."

The collaboration between Aurora and Sequana focuses on functional genomics as well as the use of positionally cloned disease genes in high-throughput screens.

Aurora's technology has come at a perfect time, Kinsella said, at the intersection of genomics and combinatorial chemistry.

The company's fluorescence-based screens use mammalian cells engineered with disease pathways to judge the biological effectiveness of drug candidates on enzymes, proteins, ligands and receptors associated with a specific disorder.

The fluorescence screens, Aurora officials said, enable researchers to monitor immediately whether a compound has activated or inhibited the targeted molecular events. *