Cadus Pharmaceuticals Inc., which has two major pharmaceuticalcollaborations for drug discovery based on regulation of cellsignaling pathways, priced its initial public offering (IPO) this weekon one of the most volatile trading days since the October 1987market crash.

The Tarrytown, N.Y., company's 2.75-million share IPO was pricedat $7 per share, below the projected range of $10.50 to $12.50,Tuesday when the NASDAQ Composite Index fell 50 points beforerebounding to end down 6.7 points. That disheartening down-turnfollowed Monday's drop of 43.3 points, or nearly 4 percent, whichwas the steepest plunge in the NASDAQ composite since the 1987collapse.

Cadus' stock (NASDAQ:KDUS) debuted Wednesday and closed at$7. It ended Thursday up 50 cents to $7.50.

The IPO generated $19.25 million in gross proceeds and thecompany has 11.5 million shares outstanding. When Cadus registeredin May 1996 for the equity offering, it anticipated raising $32million.

As of March 31, 1996, Cadus had $25 million in cash. It reported anet loss of $43,000 for the first three months of this year.

Underwriters are Hambrecht & Quist and Genesis Merchant GroupSecurities, both of New York, and Montgomery Securities, of SanFrancisco. They have options to buy another 412,500 shares to coveroverallotments.

Cadus' technology uses yeast cells modified with human genes tocreate specific human signal transduction pathways triggered byreceptors, which are expressed by the yeast cell. The hybrid human-yeast cells can evaluate potential drug candidates for bindingcapabilities and for how they affect the function of the receptors,which are responsible for transferring external signals into cells toregulate their behavior.

Cadus' yeast-based assays are used to screen libraries of compoundsgenerated by combinatorial chemistry, natural products and standardchemical methods.

The company's research focuses on G protein-coupled receptors,which are involved in most cell functions, and two other receptortypes involved in cell growth and immune system regulation.

Cadus has major drug discovery collaborations with Bristol-MyersSquibb Co., of New York, and Solvay Group, of Brussels, Belgium,worth a potential $100 million.

Bristol-Myers is targeting cardiovascular diseases, central nervoussystem disorders, acute inflammation, obesity and diabetes. Solvay isfocusing on cardiovascular, central nervous system, gynecologicaland gastrointestinal disorders.

Cadus also has its own drug discovery programs for allergicinflammation, acute inflammation and cancer.

The company's largest shareholder is Carl Icahn, the formerTransWorld Airline chairman who now heads Icahn & Co. Inc., ofNew York. n

-- Charles Craig

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

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