In the market's "waxing and waning" fascination withbiotechnology, the 3-million-share public offering byAthena Neurosciences Inc. apparently fell victim to arecent downturn in interest following last summer'sfrenzy of investment.

The South San Francisco-based company sold all theshares it registered, but had to settle for a price thatdropped 20 percent from last month when it announcedthe stock sale. Of the 3 million shares, 600,000 werebought by international investors.

Instead of raising $35 million at $11.75 per share,Athena's offering generated $28 million at $9.37 pershare. The company's stock (NASDAQ:ATHN) closedWednesday at $8.87, down $1.12, an 11 percent dip.

Beth La Sagna, Athena's spokeswoman, said the lowershare price reflected a loss of investor interest industrywide in biotechnology.

"Generally, the recent waxing and waning infatuation iswaning," she said.

The financing, she added, gives Athena enough funds togo forward with all the projects it had planned.

Athena ended the third quarter of 1995 with $35.5 millionin cash and the company reported a net loss for the firstnine months of this year of $23 million. The follow-onoffering gives the company more than $60 million in cashreserves. Athena has 27.4 million shares outstanding.

Managing the offering were PaineWebber Inc., AlexBrown & Sons Inc. and Schroder Wertheim & Co., all ofNew York. In addition to the 3 million shares sold, theunderwriters have options to purchase 450,000 shares tocover overallotments.

Athena, which is developing drugs and diagnostics forneurological disorders, has a new drug application (NDA)for Zanaflex (tizanidine hydrochloride) filed with theFDA. The agency sent a non-approvable letter in Marchfor the compound, but Athena officials said they haveaddressed the FDA's concerns and the drug is underreview.

Zanaflex, targeted for treatment of spasticity associatedwith spinal cord injuries and multiple sclerosis, waslicensed from Switzerland-based Sandoz Ltd. and ismarketed in about 50 other countries.

Athena also has completed a second pivotal study of anepilepsy treatment and expects to file an NDA before theend of 1995. The drug, Diastat (diazepam), is aimed atreducing the number of recurrent seizures in epilepticssuffering a condition called acute repetitive seizure.

In July Athena received $9.4 million from Wyeth-AyerstLaboratories, a subsidiary of Madison, N.J.-basedAmerican Home Products Corp., to extend theircollaboration on discovering drugs that block white bloodcells from migrating to the brain for treatment of immunedisorders and inflammatory diseases. n

-- Charles Craig

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