NeXstar Pharmaceuticals Inc. withdrew a 2.5 million share publicoffering because of a sharp decline in its stock, which it blamed, inpart, on "dirty tricks" by The Liposome Co., a rival firm that hasbeen embroiled in a four-year patent fight with NeXstar over theownership of liposome drug delivery technologies.

When NeXstar, of Boulder, Colo., registered for its public offeringMay 29, 1996, its stock was trading at $24.37. A week later, TheLiposome Co. said the U.S. Patent and Trademark Office (PTO) re-examined one of the disputed patents and advised the Princeton, N.J.,firm its claims will be allowed and the patent will be issued July 2,1996.

Based on the patent, Liposome officials said they will seek damagesfrom NeXstar and try to block sales of the company's AmBisome, aliposomal form of the antifungal drug, amphotericin B. Liposome'sAbelcet, which is an amphotericin B lipid complex, competes withAmBisome.

On June 6, 1996, the day Liposome released news about its patent,NeXstar's stock dropped 22 percent, from $24 to $18.75.

"They [Liposome Co.] pulled a dirty trick," said Joseph Alper,NeXstar's director of corporate communications, referring to thetiming of the announcement. "What they did was a bold-facedattempt to damage our stock offering."

Alper, who contended AmBisome will not be affected by theLiposome patent, said the fallout from the dispute with its rival plusan overall downturn in the market for biotechnology stocks pushedNeXstar's price to a level the company felt did not reflect its value.

NeXstar withdrew a public offering in October 1995 when its tradingprice dipped to $11.50 per share. The company's stock(NASDAQ:NXTR) ended Tuesday up $1.62 to $18.75.

Liposome (NASDAQ:LIPO) closed at $18.87, a $1.50 increase.

Brooks Boveroux, Liposome's vice president of investor relations,said, "If we're being accused, it seems as though they [NeXstar] arelooking for a scapegoat."

Boveroux noted most Wall Street analysts have acknowledged themarket for biotechnology has "cooled" following a year-long surge.

NeXstar's AmBisome is sold in 22 countries outside the U.S. Thecompany expects to file for FDA approval this year. In April 1996,NeXstar received FDA approval of its first drug in the U.S. _DaunoXome, a liposomal form of the anti-cancer drug, daunorubicin,for AIDS-related Kaposi's sarcoma.

The Liposome Co.'s Abelcet gained FDA approval in November1995 and is sold in 15 other countries worldwide.

For the first three months of 1996, AmBisome has generatedrevenues of $17.2 million. Abelcet's sales were $10 million for thefirst quarter of this year.

NeXstar, which expected to raise about $60 million in the publicoffering, planned to use the funds to buy oncology products to sellalongside DaunoXome.

Managing the public offering were Alex. Brown & Sons Inc., ofBaltimore, Vector Securities Inc., of Deerfield, Ill., and Smith BarneyInc. and SBC Warburg Inc., both of New York.

Alper said NeXstar will look for alternative methods of proceedingwith efforts to license other cancer drugs.

As of March 31, 1996, NeXstar had $46 million in cash and reporteda net loss of $6.3 million for the first three months of the year. n

-- Charles Craig

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