Pharmacopeia Inc., which is using its combinatorialchemistry techniques in collaborations with threepharmaceutical companies, filed for an initial publicoffering of 2.25 million shares.

The Princeton, N.J., company expects the shares to bepriced between $14 and $16, which would result in grossproceeds of $31.5 million to $36 million. New York-based underwriters Alex Brown & Sons Inc., Cowen &Co. and UBS Securities have an overallotment option for337,500 additional shares.

Pharmacopeia reported having $8 million in cash on Sept.30, 1995. After the offering it will have about 9.3 millionshares outstanding. Proceeds from the offering areearmarked for enhancing and expanding automationtechnology, expanding laboratory and productionfacilities, research and development and other corporatepurposes.

Pharmacopeia has drug-discovery collaborations withSandoz Ltd., Berlex Laboratories Inc. and Schering-Plough Corp.

Earlier this month Sandoz, of Basel, Switzerland, andPharmacopeia entered a research collaboration togenerate drugs for cancer, organ transplant rejection,central nervous system diseases and skin disorders. Termsof that deal were not disclosed.

The February 1995 deal with Berlex, a Schering AGcompany in Richmond, Calif., addresses specific multiplesclerosis targets. Pharmacopeia can get up to $20 millionin the next "several years" in equity investment, researchfunding and milestone payments.

Pharmacopeia's first major deal, with Schering-Plough,of Madison, N.J., is focused on specific targets in cancerand asthma. Schering-Plough will pay up to $26 millionover the next "several years" in equity investments andresearch and development funding, and Pharmacopeiacould realize up to $49 million in milestone payments.

Pharmacopeia was founded in 1993 with $4.25 million ininitial venture capital financing provided by AvalonVentures, Institutional Venture Partners and KleinerPerkins Caufield & Byers. Avalon also provided abouthalf a million dollars in seed financing. In June 1994 thecompany announced it completed a $10.3 million secondround of financing. The lead investor in that financingwas Oak Investment Partners.

The company's approach to combinatorial chemistrydiffers from other approaches in that it involvesdevelopment of a process of solid-phase synthesis and theuse of microscopic beads to help identify the structure ofa compound.

Pharmacopeia can create a library of more than 100,000compounds attached to the beads. To identify acompound's structure on one of the beads, researchersuse a set of inert chemical tags that encode a series ofchemical reactions each bead has experienced. The tagsthen are read and the active ingredient is synthesized on alarge scale for additional testing. n

-- Jim Shrine

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