With three drugs in clinical trials, including one ready forlate-stage studies in 1996, Connective Therapeutics Inc.is headed into the capital markets with an initial publicoffering (IPO) and hopes of raising up to about $32million.

The Palo Alto, Calif., company registered to sell 2.5million shares at a range of $11 to $13 with expectationsof generating between $27.5 million and $32.5 million.

Connective is developing drugs for disorders related toeither over-production or breakdown of connective tissuein the body.

The company recently licensed from Genentech Inc., ofSouth San Francisco, rights to develop and marketgamma interferon for treatment of dermatologicaldiseases. Financial terms were not disclosed.

Genentech already sells the lymphokine under the nameActimmune for treatment of chronic granulomatousdisease and is evaluating it in Phase III studies for renalcell carcinoma.

Connective officials said they expect to launch next yearPhase II/III trials of gamma interferon for atopicdermatitis, an inflammatory skin disorder, and Phase IIstudies for treatment of keloids, which are enlarging scarscaused by excessive collagen in the skin.

Connective's Phase II/III studies for atopic dermatitis willbuild on Phase I and II trials conducted by Genentech,which is a shareholder in Connective.

In addition to gamma interferon, Connective licensedfrom Genentech another drug, relaxin. The natural proteinhormone regulates collagen production and is in clinicaltrials for scleredema, a hardening of the skin and internalorgans caused by excessive collagen.

The company also has under clinical development formultiple sclerosis a T cell receptor (TCR) peptide vaccineaimed at boosting the immune system's natural regulatoryT cells in an attempt to offset abnormal T cellsresponsible for autoimmune disease activity. In a Phase Istudy, patients receiving the treatment not onlyexperienced stimulation of regulatory T cells, they alsoshowed a decrease in immune response to myelin basicprotein, which is an antigen believed to be associatedwith multiple sclerosis.

In addition to targeting TCR peptides for autoimmunediseases, such as multiple sclerosis, the company isdeveloping them for connective tissue disorders, such asrheumatoid arthritis.

The company was founded in 1993 and as of March 1995had raised a total of $17.2 million. In addition toGenentech, early investors include Kleiner, Perkins,Caufield and Byers, of San Francisco, and SierraVentures, of Menlo Park, Calif. n

-- Charles Craig

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