By Lisa Seachrist

Washington Editor

Ilex Oncology Inc. has completed an initial public offering of 2.5 million shares of common stock at $12 per share, raising gross proceeds of $30 million.

The San Antonio, Texas, company intends to use the majority of the money to fund internal product development in cancer prevention compounds, expand drug development and increase its portfolio of compounds.

“The biggest use of the money will be for the development of those products for which we lack a marketing partner,“ said James Koch, vice president and chief financial officer at Ilex. “That is primarily our chemoprevention compounds.“

Ilex focuses on “expediting the development of oncology drugs,“ Koch said. The company not only develops products to be marketed by third parties, but also operates as a full-service contract research organization (CRO) helping pharmaceutical and biotech companies with clinical trails, regulatory submissions, toxicology and manufacturing.

“We don’t do basic research or look to market products,“ said Koch, who noted that the company seeks to license and follow up on compounds that have shown promising preclinical and Phase I results but for one reason or another aren’t considered priority agents. “We focus on the drug development that takes place in between.“

Ilex currently has eight of its nine cancer treatments in clinical trials and one of its two chemoprevention drugs in clinical trials, Koch said.

The company filed a new drug application in October 1996 for its lead product candidate, mitoguazone dihydrochloride (MGBG), for the treatment of refractory AIDS-related non-Hodgkin’s lymphoma. Ilex licensed the marketing rights for the drug to Sanofi Winthrop Pharmaceuticals Inc., of New York. Ilex also is exploring MGBG as a therapy for non-small cell lung cancer and pancreatic cancer.

In addition to MGBG, Ilex began pivotal Phase III clinical trials of its glioblastoma therapy, Crisnatol, in the third quarter of 1996. Crisnatol is being developed with Janssen Pharmaceutica N.V., a subsidiary of Johnson & Johnson.

The company has products in development for the treatment of bladder cancer, prostate cancer, solid tumors and acute lymphoblastic leukemia.

In addition to treatments for established cancers, the company is developing compounds to prevent cancer from occurring in the first place. Ilex’s lead chemoprevention compound is alpha-difluoromethylomithine (DFMO), which inhibits the growth of tumor cells and irreversibly blocks the enzyme ornithine decarboxylase, which controls a key step in the synthesis of polyamines. The compound is being evaluated in HIV-infected patients with precancerous cervical lesions and in patients with breast cancer. DFMO also is being studied in National Cancer Institute-sponsored chemoprevention trials for bladder, colon and prostate cancers.

The company raised $10 million in a private placement in July 1996. According to its prospectus filed with the Securities and Exchange Commission, Ilex had $23 million in cash on hand at the end of 1996 and posted a $600,000 net loss for the year.

“With the CRO side of the business and our partnerships, we plan to be largely self-funding,“ Koch said. “However, we probably won’t see that for a couple of years.“ *