Cadus Pharmaceutical Corp., which developed yeast-based assays toidentify small-molecule compounds for regulating signals humancells use to control their activities, is going public with an offering of2.75 million shares to raise about $32 million.

The Tarrytown, N.Y., company, in registering for the initial publicoffering (IPO), projected a per-share price range of between $10.50and $12.50. Based on $11.50, the offering would generate $31.6million in gross proceeds.

Following the IPO, Cadus will have 11.5 million shares outstanding.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' corporate partnerships with Bristol-Myers Squibb Co., ofNew York, and Solvay Group, of Brussels, are worth a potential $100million for use of the four-year-old company's drug discoverytechnology. In its IPO prospectus, Cadus said it had received nearly$35 million from its alliances.

As of March 31, 1996, Cadus had $25 million in cash. It reported anet loss for 1995 of $1.5 million and a net loss of $155,000 for thefirst three months of 1996.

Bristol-Myers owns 18.4 percent of Cadus, whose largest shareholderis Carl Icahn, the former TWA chairman who is president andchairman of Icahn & Co. Inc., of New York. Icahn owns 38.5 percentof Cadus.

Cadus was formed in 1992 as a spin-off from ImClone Systems Inc.,of New York, which owns an 11 percent interest.

Cadus' technology is based on modifying yeast cells with humangenes to create a specific human signal transduction pathwaytriggered by a receptor, which is expressed by the yeast cell. Thehybrid human-yeast cells evaluate potential drug candidates not onlyfor binding capabilities, but also for how they affect the receptors'function, which involves transferring external signals into cells toregulate their behavior.

The yeast-based assays can be used to screen libraries of potentialdrug candidates generated by combinatorial chemistry, naturalproducts and standard chemical methods.

Cadus' research focuses primarily on G protein-coupled receptors,which are involved in most cell functions, but also includes workwith two other types of receptors involved in cell growth and immunesystem regulation.

Although about 200 G protein-coupled receptors are known, thebiological functions of thousands more, called orphan receptors, haveyet to be discovered. Cadus' technology enables the company toanalyze the effect of potential drugs on known receptors as well asidentify the functions of orphan receptors.

Cadus' own drug discovery programs focus on allergic inflammation,acute inflammation and cancer. The Bristol-Myers alliance targetscardiovascular diseases, central nervous system disorders, acuteinflammation, obesity and diabetes. The collaboration with Solvay isaimed at discovering drugs for cardiovascular, central nervoussystem, gynecological and gastrointestinal disorders. n

-- Charles Craig

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