Arris Pharmaceutical Corp. said Friday it raised $39 million in apublic offering of 3 million shares priced at $13 apiece.
Arris, which acquired Khepri Pharmaceuticals Inc. late last year, nowhas about 13.2 million shares outstanding. It ended 1995 with $31million in cash.
The South San Francisco company is projecting a burn rate of $6million to $8 million this year, which takes into account partnershipsit expects to sign this year, said Shari Annes, the company's vicepresident, investor relations and corporate communications.
One 1996 deal already was completed when Arris and Pharmacia &Upjohn Co. agreed earlier this month to use Arris' combinatorialchemistry to develop a probe library of 250,000 diverse smallmolecule compounds. That collaboration involved undisclosedlicense fees and milestone payments to Arris.
A collaboration expected to come about this year will apply Arris'Delta technology to a protease target already being worked on by apharmaceutical company, Annes said. The Delta technology allowsfor the rapid design and synthesis of potent and selective proteaseinhibitors.
The other possible collaboration, Annes said, encompasses a cysteineprotease or receptor target Arris got when it acquired Khepri. Beforethe acquisition Arris already was working on inhibitors of tryptaseand chymase proteases, which are implicated in inflammatorydisorders.
The offering was underwritten by Cowen & Co. and Hambrecht &Quist LLC, both of New York, and San Francisco-based RobertsonStephens & Co.
"A number of investors we visited expressed concerns about thebiotech sector's sustainability," Annes said. "We had a sense themarket was getting soft and we were thrilled to be able to completethe offering."
Arris' lead product, APC 366, which is being developed for asthma,is a small molecule that inhibits tryptase. Results of a Phase IIa studyshould be available in late April or early May, Annes said. That drugis being developed in collaboration with Bayer AG, of Leverkusen,Germany. Annes said Arris expects to nominate a second-generationtryptase inhibitor in the first half of this year to take into the clinic.
Arris also hopes to have identified by the end of the year ananticoagulant product to take into clinical trials. That program,targeting inhibitors of serine protease, also is being done withPharmacia & Upjohn, of Uppsala, Sweden, and Kalamazoo, Mich.
A third collaboration Arris has with Pharmacia & Upjohn relates todevelopment of a growth hormone mimetic. In that receptor-basedarea Arris also is working with Amgen Inc., of Thousand Oaks,Calif., on small molecules that mimic erythropoietin.
Arris' stock (NASDAQ:ARRS) lost 38 cents per share Friday toclose at $12.88 per share. n
-- Jim Shrine
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