Diacrin Inc., developing transplantable porcine cells, registered foran initial public offering of 2.5 million units expected to be pricedbetween $14 and $16 each.

The Charlestown, Mass., company expects to raise between $35million and $40 million in the offering. Managing underwriters arePaineWebber Inc., of New York, and Vector Securities InternationalInc., of Deerfield, Ill.

Diacrin is developing populations of cells from pigs that can be usedto treat human diseases caused by cell dysfunction or cell death.Clinical studies of the treatment are ongoing in Parkinson's disease.Additional candidate cell types include: neurons for the treatment ofHuntington's disease, focal epilepsy and cognitive disorders; livercells for familial hypercholesterolemia; cardiac myocytes for cardiacdisease; and pancreatic islets for diabetes.

HealthCare Ventures, of Edison, N.J., is the founding venture fund.Other principal investors are Biotechnology Venture Fund, ofLondon, and Everest Trust, of New York. Diacrin was founded inOctober 1989 and began operations in March 1990. To date it hasraised about $23 million in equity and $7 million in convertiblenotes.

Scientists at Diacrin developed the technology to transplant pig cellsinto humans. Immunomodulation technology designed to preventrejection of the transplanted cells was licensed exclusively fromMassachusetts General Hospital in Boston.

The immunomodulation technology involves the selective treatmentof major histocompatibility complex class I antigens on cellpopulations before transplantation, which would make unnecessarythe need for chronic immunosuppression. The ability of thetechnology to prevent rejection of the porcine cells withoutcompromising the immune system's protective ability has beendemonstrated in animal models, including primates.

Diacrin's lead product, NeuroCell-PD, is in Phase I testing. FourParkinson's patients have been treated in a trial expected to include12 people. In one of the patients the immunomodulation technologywas used instead of systemic immunosuppression.

The company, in its prospectus, said that the transplanted cells appearto be functioning in all four patients. Specifically, all four havereduced their anti-Parkinson's medication, the company said, addingthat the first patient underwent pre- and post-transplant positronemission tomography scanning to measure survival of the cells. Thescans showed graft survival and increased activity of transplantedneurons.

Assuming the trial is successfully completed, Diacrin would beginPhase II studies by early 1997.

The second product candidate is NeuroCell-HD for Huntington'sdisease. Diacrin has received FDA approval to begin Phase I studies,which are scheduled to begin early in 1996.

Five more products are in preclinical development.

The 2.5 million units in the initial public offering (IPO) each consistof one share of common stock and a warrant to purchase one share ofstock at an undetermined percentage of the IPO price. Diacrin willhave nearly 12.4 shares outstanding after the IPO. That figureassumes conversion of all notes and preferred stock as well ascommon stock out and to be sold in the IPO. It does not assumeconversion of the warrants.

On Sept. 30, 1995, Diacrin reported having 5.6 million in cash andequivalents. Its net loss for 1994 was nearly $5.9 million and about$4.2 for the first nine months of 1995. n

-- Jim Shrine

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