By Charles Craig

After a slower than expected January for biotechnology financings, the equity markets are beginning to sizzle with new offerings, such as Vertex Pharmaceuticals Inc. and PathoGenesis Corp., whose anticipated $190 million in combined funding would more than triple last month's total take.

Vertex, of Cambridge, Mass., proposed selling 2.5 million shares and based on the $51.125 closing price of its stock (NASDAQ:VRTX) before it filed for the offering Tuesday, the company would generate about $128 million. Vertex closed Wednesday at $46.75, down $0.50.

As of Dec. 31, 1996, Vertex had $130.4 million in cash and reported a net loss of $40 million last year. Following the offering, the company will have 23.6 million shares outstanding.

Vertex is developing small molecule drugs based on its discoveries of the 3-D structure of proteins targeted by the therapeutic compounds.

Its lead product is an HIV protease inhibitor, VX-478, which is under evaluation in Phase III trials in collaboration with Glaxo Wellcome plc. The London-based pharmaceutical firm markets the two best-selling AIDS drugs, AZT and 3TC, which are reverse transcriptase inhibitors and are being used in combination with protease inhibitors already on the market.

PathoGenesis Corp., of Seattle, registered for a 2 million-share offering and based on the $30.25 closing price of its stock (NASDAQ:PGNS) before it filed for the offering Tuesday, the company would raise about $60 million. PathoGenesis' shares ended Wednesday at $29.75, unchanged.

As of Dec. 31, 1996, PathoGenesis had $60.7 million in cash and reported a net loss of $21.3 million last year. Following the offering, the company will have 16 million shares outstanding.

PathoGenesis' lead product is TOBI, an inhaled form of the antibiotic tobramycin, for treatment of chronic lung infections in cystic fibrosis patients. The company reported successful Phase III trials of the treatment last month and said it expects to submit a new drug application with the FDA during the second quarter of this year.

The Vertex and PathoGensis equity financings plus $130 million sought by Human Genome Sciences Inc., of Rockville, Md., in another public offering filed Tuesday may indicate investment bankers and company officials believe the bear market that has embraced biotechnology since last summer is turning bullish.

The Vertex, PathoGenesis and Human Genome Sciences' offerings could be worth $320 million. In January, two public equity financings raised $56.4 million and through Feb. 21, the total reached $131 million.

In January and February 1996, which was about mid-way through a record-setting 12 months for public equity financings, biotechnology firms attracted more than $715 million from eager investors.

The money disappeared in the summer of 1996. The first rebound was expected after Labor Day and when that never arrived, the beginning of 1997 was touted as the new rally's launching point.

Despite market conditions, both Vertex and PathoGenesis expect to cash in on their late-stage clinical development successes.

In addition to its HIV protease inhibitor, Vertex is developing a small molecule compound, VX-710, to prevent multi-drug resistance (MDR), a genetic mechanism in cancer cells that counters the effects of chemotherapy.

Vertex's partner for development of VX-710 in Canada is BioChem Pharma Inc., of Laval, Quebec, which is the company that co-developed 3TC with Glaxo.

Vertex also has clinical trials under way for a second MDR inhibitor, VX-853, to improve cancer chemotherapy and VX-366, a butyrate compound, for treatment of symptoms associated with sickle cell anemia and beta thalassemia, which are blood disorders.

Underwriters for Vertex's offering are Cowen & Co., Bear Sterns & Co. Inc., Robertson Stephens & Co., and J.P. Morgan & Co., all of New York.

PathoGenesis' drug development is focused on chronic infectious diseases. It is banking on approval of TOBI for its continued corporate health.

In addition to development of TOBI as a cystic fibrosis treatment, the company is targeting the drug for bronchiectasis, which is a bacterial infection leading to inflammation and damage to lungs; and for tuberculosis.

The company also has another drug, PA-1648, in clinical trials for tuberculosis. PA-1648 is a derivative of the antibiotic rifampin, which is one of four drugs currently used to treat the disease. The other three are isoniazid, ethambutol and pyrazinamide.

PathoGenesis said PA-1648 may require less frequent administrations than rifampin. Another tuberculosis drug, PA-824, is in preclinical development and is designed as a replacement for isoniazid.

Underwriters for PathoGenesis' offering are Montgomery Securities, Prudential Securities Inc., and Hambrecht & Quist LLC, all of New York. *