Sequus Pharmaceuticals Inc., awaiting word to market itsfirst product in the U.S., grossed about $43 million in anoversubscribed public offering of 3.9 million shares at$11 apiece.

The offering, announced Wednesday, involved 30 percentmore shares than was originally proposed at a price 8percent lower than the stock was trading when it wasregistered. So the Menlo Park, Calif.-company did well inwhat has become a more selective financing window forthe biotechnology industry.

"Everybody was surprised at just how large the orderswere, considering what happened to some of the otherdeals in October," said I . Craig Henderson, chairman andCEO of Sequus.

The stock (NASDAQ:SEQU) Wednesday gained most ofwhat it lost during the registration period, rising 63 centsto close at $11.63.

Among those companies having recent trouble withfinancings was one of Sequus' chief competitors, NeXstarPharmaceuticals Inc., of Boulder, Colo. NeXstar earlierthis month pulled a 3-million-share offering because ofthe drop of its stock price along with its strong cashreserves.

Both NeXstar and Sequus have received approvableletters from the FDA for their liposomal formulations ofcancer drugs to treat Kaposi's sarcoma. NeXstar has theadvantage in that its approval will be as a first-linetherapy, while Sequus' will be for refractory patients. ButSequus, which is hoping for approval and launch in thefourth quarter, should be first on the market.

Henderson said Sequus now has completed a randomizedPhase III trial of the product, Doxil (liposomaldoxorubicin), and submitted the data to the FDA. Doxilwas recommended for approval on Phase II data.Henderson would not disclose what Sequus intends to dowith the additional information.

L. Scott Minick, Sequus' president and chief operatingofficer, said the company's sales staff is ready for thelaunch of Doxil.

With the offering, Sequus should have $50 million to $55million in cash on hand. It now has about 25.3 millionshares outstanding.

Henderson said, "The most important thing is to launchDoxil and get the clinical infrastructure going to developthe drug for a variety of solid tumors."

Doxil has completed Phase II studies in ovarian cancer, isin Phase II in breast cancer and is in a Phase I/II trial inliver cancer. A prostate cancer Phase II study recently wasstarted, and a number of additional studies are beingplanned, Henderson said. Phase III studies in breast andovarian cancers are being planned.

Donald Stewart, the company's vice president of finance,said, "With these proceeds and other financing objectiveswe have, including licensing deals and marketing ofDoxil in Europe, we should be able to get to profitability.The only reason we'd go back to the Street is for astrategic reason."

The offering's co-managers were Roberston, Stephens &Co. L.P., of San Francisco, and New York firms DillonRead & Co. Inc., Oppenheimer & Co., and Punk, Ziegel& Knoell L.P. They have an option to purchase anadditional 585,000 shares to cover overallotments. n

-- Jim Shrine

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