Following last month's FDA approval of its liposomal cancerchemotherapeutic agent, NeXstar Pharmaceuticals Inc. saidWednesday it is heading into the equity markets to raise funds to buyother oncology products to sell alongside its first U.S. marketed drug.

The Boulder, Colo., company registered to sell 2.5 million shares. Atthe $23.75 closing price Wednesday of NeXstar's stock(NASDAQ:NXTR), the offering would raise $59 million in grossproceeds. The company's shares ended the day down 62 cents.

The FDA cleared DaunoXome in April 1996 as a primary treatmentfor AIDS-related Kaposi's sarcoma. DaunoXome uses liposomes todeliver daunorubicin, an approved cancer drug, directly to the site oftumors, reducing the toxic side effects of the chemotherapeutic agent.

DaunoXome is the second liposomal form of a cancer drug to receiveFDA market clearance. The first was Doxil, which deliversdoxorubicin in liposomes. Sequus Pharmaceuticals Inc., of MenloPark, Calif., received approval of Doxil in November 1995 as asecond-line treatment for AIDS-related Kaposi's sarcoma.

NeXstar said it plans to use some funds from the public offering tobuy cancer drug candidates _ in late-stage clinical development _from pharmaceutical companies seeking to reduce pipelines swollenby the recent mergers throughout the industry.

The added products, NeXstar said, would allow the company to takeadvantage of the 20-person sales staff assembled in the U.S. tomarket DaunoXome. The drug also is approved in Canada and 12European countries.

NeXstar is expected to file for FDA approval this year of anotherliposomal drug, AmBisome, which is on the market in 22 countriesoutside the U.S. AmBisome is a liposomal form of the antifungaldrug, amphotericin B.

With about $59 million from the equity sale, NeXstar would havemore than $100 million in cash. As of March 31, 1996, the companyhad $46 million and reported a net loss for the first three months ofthe year of $6.3 million.

Following the public offering, NeXstar will have 27.6 million sharesoutstanding. Underwriters are Alex. Brown & Sons Inc., ofBaltimore, Vector Securities International Inc., of Deerfield, Ill., andSmith Barney Inc., and SBC Warburg Inc., both of New York. Theyhave options to purchase another 375,000 shares to coveroverallotments.

In October 1995, NeXstar withdrew a planned public offering ofthree million shares because company officials felt their stock,trading at a $11.50 per share, was undervalued.

Five months later, in February 1996, NeXstar completed a privateplacement of 1.43 million shares for $18.50 per share to institutionalinvestors, raising $25 million in net proceeds to help fund the launchof DaunoXome and support other regulatory submissions. n

-- Charles Craig

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