AutoImmune Inc. wrote another chapter in thebiotechnology story that has been selling well across thecountry, as the Lexington, Mass., company grossed $56million in a follow-on offering.

The offering was increased 500,000 shares, to 3.5million, and sold at a per-share price of $16. WhenAutoImmune registered to sell the shares on July 28,1995, its stock (NASDAQ:AIMM) was trading at $11.75.The company sold 2 million shares at $4.50 each in aprivate placement in January.

"You make hay while the sun shines," said TimothyWilson, a senior biotechnology analyst with New York-based Hambrecht & Quist Inc. who touted AutoImmunewhen its stock was down. "The nice thing about this waveof offerings is they've generally been with high-qualitycompanies that have achieved clinical trial successes.

"The companies that have done well are performing at themoment," Wilson said. "For the time being it's going tobe the high-quality companies that are going to comeout."

Wilson said the "wave of offerings" _ which recentlyhas included an $89 million follow-on by Cephalon Inc.,of West Chester, Pa., and an $82 million offering byFoster City, Calif.-based Gilead Sciences Inc. _ shouldbe undertaken only by advanced biotech companies, sincetoo many offerings would be dilutive.

"I would not like to see the weaker companies startraising money just yet," Wilson said. "That could kill thegoose that lays the golden egg."

The offering leaves AutoImmune with about 15.8 millionshares outstanding and some $69 million in cash andequivalents. The company said the financing would takeit through mid-1997 at least.

AutoImmune has completed enrollment in a 500-patientPhase III trial of Myloral _ a myelin formulation madefrom bovine brains _ for multiple sclerosis. Resultsaren't expected until early in 1997.

Wilson said investors took particular notice of recentlyreleased Phase II data on Colloral, a product made fromchicken collagen that's being developed for rheumatoidarthritis.

"AutoImmune has been able to explain to investors face-to-face what the data means, and it's gone down well,"Wilson said. "It's good data. It doesn't take much tomove a stock when a company goes on the road and itsstory has improved."

The Colloral data, Wilson said, suggests AutoImmune's"oral tolerance" approach to drug development is a goodone. "As recently as six months ago, you couldn'tconvince anyone of that."

Oral tolerance is based on the body's ability to take inforeign proteins and not trigger a broad immune attackagainst those proteins, said Jo Ann Wallace,AutoImmune's vice president, corporate development. Invery selective doses, she said, the proteins are processedin the gut and trigger production of regulatory T cells,which then move through the body to suppress theautoimmune attack.

The offering was underwritten by Hambrecht & QuistLLC and UBS Securities Inc., both of New York, and SanFrancisco-based Montgomery Securities. AutoImmuneand a selling shareholder have granted the underwritersan option to purchase an additional 525,000 shares tocover overallotments.

AutoImmune's stock closed Friday at $16.13 per share,down 13 cents. n

-- Jim Shrine

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