Triangle Pharmaceuticals Inc. is venturing out into a tough market byregistering for an initial public offering despite being only a littlemore than a year old.

The track record of management at Triangle, however, might swayinvestors and allow the Durham, N.C., company to complete theoffering while many others are pulling theirs or not trying to raisemoney at all. The scientists who founded Triangle are the same oneswho discovered and developed the blockbuster antiviral drugs AZTand acyclovir for Wellcome plc, before it was acquired last year byLondon-based Glaxo plc (now Glaxo Wellcome plc).

Triangle registered to sell 4 million shares at an estimated price rangeof $7.50 to $9.50 per share, which would generate gross proceeds of$30 million to $38 million. Underwriters Dillon, Read & Co. Inc. andBear Stearns Co., both of New York, have an option to purchase anadditional 600,000 shares to cover overallotments.

At Triangle the officials, led by Chairman and CEO David Barry, aredeveloping candidates for HIV and AIDS as well as hepatitis B. Theportfolio now includes five licensed drug candidates and two forwhich the company has an option. Four of them have shown activityagainst HIV and two of those four also are active against the hepatitisB virus. The other three are preclinical candidates for certain cancers,herpes and psoriasis.

Triangle, founded in July 1995, said in November of that year itcompleted a $4 million first round of financing. Forward Ventures, ofSan Diego, encouraged Barry and others to start the company andwas the first venture investor. In June 1996 Triangle completed asecond financing round of $18.5 million. Among the investors in thatround was The Wellcome Trust, of London, which had the largeststake in Wellcome plc when the Triangle scientists worked there.

Also investing in Triangle's second round of financing was Goldman,Sachs & Co., of New York, as well as first-round investors ForwardVentures; McFadden Brothers and Venrock Associates, of NewYork; the London office of Schroder Ventures; and Triangleexecutives.

If 4 million shares are sold the company would have about 17 millionshares outstanding. That does not include about 1 million shares thatwould be issued if certain options are exercised at an average price of$1.93 per share.

Phillip Furman, Triangle's vice president of research and chiefscientific officer, co-invented AZT along with Barry and three others.Barry, starting in 1977, led the development of acyclovir (Zovirax),which is to herpes what AZT is to HIV. Those drugs were thecornerstones of Wellcome's $1.6 billion antiviral business.

Most of Triangle's drug candidates are nucleoside analogues, likeAZT, which Barry and others took from test tube activity to FDAapproval in two years and four months. Triangle is in a Phase Ib/IIawith its lead HIV candidate and expects to get into human studies formost of the rest of its compounds by the end of 1997.

Triangle is developing drugs that can be part of the mix incombination therapies, a strategy involving a numbers of drugs andregimens to battle resistance. Despite recent successes seen inexisting combination therapies for HIV, the prolonged use of thosetherapies will create demand for new drugs, Triangle said in itsprospectus.

The company's plan is to maintain a limited corporate infrastructurefocused on drug development. It intends internally to do some of thecritical development functions, such as trial design and optimizationof drug synthesis. Then Triangle would out-source the clinical trialsand many of the manufacturing functions.

Triangle's lead candidate, a non-nucleoside reverse transcriptaseinhibitor called MKC-442, is in a Phase Ia/IIb trial for HIV. Triangleentered an option agreement in January 1996 with MitsubishiChemical Corp., of Tokyo, under which Triangle will develop thecompound and could obtain exclusive rights for most of the world.Mitsubishi is helping to fund development.

Also in Triangle's pipeline are the compounds FTC, DAPD and CS-92. FTC was licensed from Emory University, in Atlanta. The othertwo were jointly licensed from Emory and the University of GeorgiaResearch Foundation in Athens. All three are nucleoside analogues.

Triangle also has licensed two topical compounds developed byUniversity of California at San Diego professor Karl Hostetler. One,ACVMP, will be developed for herpes; the other, 2-CdAP, forpsoriasis. The seventh compound in Triangle's pipeline is alanosine,which will be developed for lung cancer.

On June 30 Triangle reported cash and equivalents of $5.8 million,with a net loss of $5.5 million in the first half of the year. Thecompany also listed $11.3 million of investments on its balance sheet.n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.