By Charles Craig

After lowering the price and the number of shares for sale, Aastrom Biosciences Inc. completed its initial public offering (IPO) Tuesday, generating $21 million to support clinical development of its cell collection and replication technologies.

Aastrom, of Ann Arbor, Mich., registered for the IPO in November 1996, proposing to sell 3.25 million shares in a projected range of $8 to $10.

With biotechnology stocks in a slump for much of the second half of 1996, Aastrom amended its offering in January 1997, reducing the price range to $7 and $8.

The offering was completed at $7 and the number of shares was lowered to 3 million for gross proceeds of $21 million. Aastrom has about 13 million shares outstanding.

The company's stock (NASDAQ:ASTM) closed Tuesday at $7.

Cobe BCT Inc., of Lakewood, Colo., Aastrom's partner in applying its Cell Production System for stem cell therapy, invested $5 million in the IPO, purchasing about 715,000 shares. Cobe, which makes blood separation systems, has worked with Aastrom since 1993 and prior to the IPO had invested $15 million in equity purchases.

Following the offering, Cobe, a subsidiary of Sweden's Gambro AB, owns about 24 percent of Aastrom and is the single largest stockholder.

As of Sept. 30, 1996, Aastrom had $7 million in cash and reported a net loss of $3.3 million for the first nine months of the year.

Underwriters for the IPO were Cowen & Co. and J.P. Morgan & Co., both of New York. They have options to purchase an additional 450,000 shares to cover overallotments.

Aastrom officials have said their Cell Production System is as easy to operate as a video cassette recorder. The technology is designed to eliminate labor-intensive laboratory production of cells with an automated process so simple it can be used on-site in clinics and hospitals.

The most advanced application of the Cell Production System is the stem cell therapy program in development with Cobe. The procedure is targeted for restoration of blood and immune system cells in cancer patients undergoing chemotherapy or radiation. A clinical trial is expected to get under way in mid-1997.

Using a small amount of bone marrow, about 10 milliliters, Aastrom's technology can generate enough stem cells to rejuvenate a patient's blood and immune system. Currently a quart of bone marrow, extracted in multiple procedures over as many as two days, is needed for a transplant.

In describing the technology, Aastrom officials said cells are squirted into a cell cassette, which is placed in a cell production incubator. After 10 days, the targeted dosage of cells is grown and transferred directly into a blood bag. The whole process is conducted in a sterilized environment.

In addition, company officials said the Cell Production System can be used for automated replication of other types of cells, such as T cells and solid tissue cells.

The system also is applicable for ex vivo gene therapy. Aastrom is developing another product, called a Gene Loader, to assist in getting therapeutic genes into cells and chromosomes. *