Neose Technologies Inc. is proposing an initial public offering of2.25 million shares priced between $12.50 and $14.50 each.

The Horsham, Pa., company expects to gross between $28.1 millionand $32.6 million in the offering. Smith Barney Inc., of New York,and Vector Securities International Inc., of Deerfield, Ill., areunderwriting the offering. They have an overallotment option onanother 337,500 shares.

After the offering Neose will have nearly 7.8 million sharesoutstanding. That total reflects the conversion of outstandingpreferred stock into common shares and the exercisement of certainstock warrants and options. It does not include certain outstandingwarrants and options that could be converted into about 1.2 shares.

On Sept. 30, 1995, Neose reported nearly $7.8 million in cash andequivalents. Its net loss in 1994 was $6.2 million, and through thefirst nine months of 1995 the company lost $3.6 million.

Neose, incorporated in January 1989, focuses on the discovery anddevelopment of complex carbohydrates (oligosaccharides) fornutritional and pharmaceutical uses. The company said the use ofoligosaccharides has been limited despite the role they play in humandisease because of their complexity and the difficulty and expense inproducing them.

Neose said its Multi-Transferase Reaction (MTR) technology allowsfor the rapid and cost-efficient production of naturally occurringoligosaccharides.

Abbott Laboratories and Neose are applying the MTR technology tothe development of breast milk oligosaccharides as additives to infantformula.

In therapeutics, the company is using the technology to developcomplex carbohydrates to treat gastrointestinal and respiratoryinfections, and to prevent xenotransplant rejection.

The company's lead pharmaceutical product is NE-0080, a naturallyoccurring human gastrointestinal oligosaccharide. It is beingdeveloped to treat gastritis and peptic ulcers caused by Helicobacterpylori infections. A 24-patient Phase I trial of NE-0080 wascompleted last year. A Phase IB trial involving 32 people withasymptomatic H. pylori infections was started last September, and isscheduled to be completed in the first half of this year.

Another product, NE-1530, is a naturally occurring human airwayoligosaccharide. The compound is in animal studies, with a targetdate of early 1997 for the filing of an investigational new drugapplication. It is being developed for treatment of chronic bronchitis,hospital-acquired pneumonia and pediatric ear infections.

The xenotransplantation development program centers around NE-0501 to neutralize the human antibodies against the mammalianoligosaccharide. Neose expects to test NE-0501 in a pig-to-baboontransplant early this year.

Abbott, of Abbott Park, Ill., has paid $3.7 million to Neose incontract payments, license fees and milestone payments. Abbott alsohas made $4 million in equity investments in Neose, and maypurchase another $2 million in stock in this offering.

In September 1995, Neose entered into a research collaboration withBracco Research USA Inc., a unit of Milan, Italy-based BraccoS.p.A, to testing oligosaccharides for in vivo imaging purposes.

The largest Neose shareholder is Lindsay Rosenwald, of The CastleGroup, who currently owns 11.2 percent of the company. He is acompany director. Neose officers and directors hold about 17 percentof the company's stock, and would hold 12 percent after the offering.

Other significant shareholders include Abbott; the University ofPennsylvania in Philadelphia; U.S. Healthcare Inc., of Blue Bell, Pa.;Morningside Ventures, of Marietta, Ohio; the Ventana GrowthFunds, of San Diego; Reliance Insurance Group, of New York; andUnion Assurance de Paris.

The company was founded on technology developed by StephenRoth, who was chairman of the Biology Department at the Universityof Pennsylvania. He now is chairman and CEO at Neose. n

-- Jim Shrine

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