Gliatech Inc., developing resorbable gels to reduce post-surgical scarring and drugs to treat nervous systemdisorders, registered for an initial public offering (IPO)Friday to sell 2.3 million shares in an attempt to raise atleast $23 million.

In its filing with the Securities and ExchangeCommission, the Cleveland company estimated the pershare price of the offering at between $10 and $12. Inaddition to the 2.3 million shares for public sale, Gliatechregistered another 345,000 shares for underwriters tocover overallotments.

Managing the IPO are Montgomery Securities Inc., ofSan Francisco, Vector Securities International Inc., ofDeerfield, Ill., and McDonald & Co. Securities Inc., ofCleveland.

If all registered shares are sold in the anticipated pricerange, Gliatech could raise between $26.45 million and$31.74 million.

Following the offering, Gliatech would have more than7.1 million shares outstanding. The company, founded in1988, reported that as of June 30, 1995, it had $5.4million in cash and an accumulated deficit of $25.4million. Assuming it raises $23 million in the IPO,Gliatech said it will have enough money to operatethrough 1997.

Gliatech's most advanced products are its Adcon (shortfor adhesion control) devices for preventing scarring andformation of adhesions following surgery. The companyhas received approval to market Adcon-L in associationwith lumbar disc surgery in Europe and expects to beginpivotal trials of the device in the U.S. this year for thesame indication.

Adcon T/N is another product being developed for tendonand peripheral nerve repair surgeries. Gliatech hassubmitted market applications in Europe and has receivedapproval to conduct pivotal studies in the U.S.

In its prospectus for the IPO, Gliatech said 1.7 millionsurgeries are performed worldwide each year on lumbardiscs, tendons and peripheral nerves. Among theproblems associated with post-operative scarring are painand motion impairment.

Since its founding, Gliatech's research has focused onglial cells, which make up about half of the cells of thecentral nervous system. They are believed to be involvedin regulating growth, differentiation and function ofneurons _ the other half of the nervous system's cellularcomposition.

Adcon is a semisynthetic carbohydrate polymeric gel thatprevents growth of scar tissue. Gliatech's scientistsdiscovered the carbohydrate used in Adcon through theirresearch into another carbohydrate, which is secreted byglial cells and which inhibits injured nerve tissue fromregenerating.

In addition to the Adcon devices, Gliatech is developingdrugs to treat Alzheimer's disease based on glial cells,which are believed to be involved in the build-up of beta-amyloid and formation of senile plaques associated withthe disorder.

Gliatech has a collaboration with Janssen PharmaceuticaN/V, of Beerse, Belgium, on the Alzheimer's diseaseprogram. Janssen is a subsidiary of Johnson & Johnson,of New Brunswick, N.J.

The proposed IPO is not the first for Gliatech. In March1992, the company attempted to go public, but withdrewthe offering because of weak market conditions.

With a recent turnaround in investor interest inbiotechnology and with a product already on the market,Gliatech apparently expects a better reception. n

-- Charles Craig

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