By Frances Bishopp

Feeling the chill of an indifferent initial public offering (IPO) market, Transcend Therapeutics Inc., developer of drugs for the treatment of diseases associated with oxidative stress, and Virologix Corp., which develops therapeutics for viral diseases, have postponed their IPOs indefinitely.

Transcend Therapeutics, of New York, which withdrew a planned IPO last year, expected to sell 2 million shares at between $12 and $14 per share. Transcend's IPO was filed on March 5, 1997, and, based on a price of $13, would have raised $26 million.

Virologix, of Cambridge, Mass., which had originally proposed selling 1.15 million shares, amended the offering to 1.075 million shares at a target price of $6. The IPO, which was filed on April 2, 1997, would have raised $6.4 million.

The postponements reflect an IPO market which saw no biotech or biotech-related IPOs in April, compared to April 1996, when 16 biotech and biotech-related IPOs were completed. (Editor's Note: Sixteen biotech and biotech-related IPOs were completed in the first four months of 1996, two of them in April.)

Since its 1997 high of 347.03 on Feb. 21, the NASDAQ Biotech Index has plummeted almost 22 percent as of April 25.

The market has also seen a significant drop in price performance. As of April 25, 1997, the stocks were trading an average 13.5 percent lower than their 1996 closing prices, marking the first time this had occurred since the down market of 1994. (For more details on the 1997 IPO market see BioWorld Financial Watch, May 5, 1997.)

Transcend's lead drug candidate, Procysteine for acute respiratory distress syndrome (ARDS), is designed to limit tissue damage caused by inflammatory responses that produce excessive quantities of toxic oxygen molecules.

Procysteine, which boosts cellular production of glutathione, a peptide that neutralizes toxic oxygen, is being developed in oral and injectable forms.

Procysteine delivers cysteine, an amino acid, into cells to assist in their generation of glutathione.

Procysteine has been evaluated in two Phase II clinical trials. By the end of 1997, the company plans to initiate a Phase II clinical trial of Procysteine for the prevention and treatment of multiple organ dysfunction (MOD).

Transcend is partnering with Boehringer Ingelheim International GmbH, of Ingelheim, Germany, on the development and marketing of intravenous formulations of Procysteine. Boehringer has agreed to pay Transcend up to $46 million ($10 million in up-front payments and $36 million in contingent milestones related to ARDS and MOD), as well as royalties on related product sales.

Besides developing vaccines and therapeutics for viral diseases, Virologix develops animal models of human viral diseases for use in pharmaceutical discovery.

The company's vaccine program is focused on human T cell leukemia virus types I and II (HTLV-I and -II), which are mammalian viruses that infect the T lymphocytes of the human immune system and are associated with a number of severe clinical disorders.

Virologix's vaccine candidates for HTLV-I and HTLV-II have been shown in animal studies to protect against viral infection. The company expects to begin human clinical trials of its two vaccine candidates in Brazil this year.

Virologix's HIV program focuses on identifying human factors required for viral replication. The company believes certain molecules within human cells could also represent important molecular targets for the treatment of HIV.

Virologix has identified one such human factor required for HIV replication. When introduced into mouse cells in tissue culture, this factor allows the virus to replicate and partially complete its life cycle.

The company said this is the first demonstration of partial HIV viral replication in a non-human cell line and is using this factor to develop a transgenic (containing human genes) mouse model of HIV infections. The company said this model, if successful, will enable for the first time the large scale screening of HIV vaccines and therapeutics in an animal system.

The model also will permit researchers to analyze in detail the life cycle of the virus, making possible the development of new agents to treat HIV infections.*

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