Genset S.A.'s genomics technologies attracted U.S. and Frenchinvestors to the second largest biotech initial public offering in aboutfour years.

The Paris-based company grossed $86.4 million Thursday from theoffering of ordinary shares in France, on the Nouveau Marche, andAmerican Depositary Shares (ADS) in the U.S. that will be traded onNASDAQ. Overallotment options on 270,000 additional shares areexpected to push the offering up to $99.4 million.

The initial offering price for the ADSs was $16. Not only was theoffering increased in size and price but the shares (GENXY) closedThursday up 31 percent at $21 in trading of 5.7 million shares. Theoffering gives Genset, which has about 20 million shares outstanding,a market capitalization of more than $400 million.

Genset's strategy is to apply large-scale industrial techniques to itsapproaches in sequencing and positional cloning. It plans to combinethose two traditional approaches with four new programs: highresolution mapping; 5-prime sequence and regulatory regionidentification, a method to rapidly identify genes; data base andbiointelligence analysis software; and functional polymorphismscanning, a way to quickly identify genetic mutations.

In its prospectus Genset said it is the only genomics company with aprogram focusing on the commercial and therapeutic significance ofthe regulatory regions of the human genome. The company also isdeveloping a targeted screening technology.

Genset plans to use about $30 million from the offering for capitalexpenditures, including expansion of its sequencing facility,construction of a new mapping facility and functional polymorphismscanning laboratory, and additional equipment. Another $43 millionis earmarked for research and development expenses, with theremainder for general corporate purposes.

The offering was underwritten by CS First Boston, of New York;Banque Nationale de Paris; and the New York-based firmsHambrecht & Quist LLC, Lehman Brothers and Punk, Ziegel &Knoell.

Genset established its DNA mapping and sequencing operations incollaboration with the French-based Center for the Study of HumanPolymorphism (CEPH) and Genethon, two private, non-profitresearch organizations.

Initially Genset will target prostate cancer, schizophrenia,osteoporosis and certain dermatological diseases. It plans to start aprogram in cardiovascular disease. Genset has collaborations in placewith Synthelabo S.A., of Paris, to discover genes associated withprostate cancer. Another collaboration is being negotiated withJanssen Pharmaceutica N.V., a Beerse, Belgium, affiliate of Johnson& Johnson.

The company said it intends to apply its genomics technology to thediscovery of drugs and enter partnerships with pharmaceuticalcompanies for development and marketing.

Another area at Genset is the manufacture and sale of synthetic DNA,for which the company now has about 2,500 customers worldwide. n

-- Jim Shrine

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