AutoImmune Inc. said Friday it registered to sell 3million shares in a public offering, which would raiseabout $35 million based on Friday's closing stock price.

AutoImmune, which has two products in late-stageclinical trials, reported $16.8 million in cash andequivalents on June 30, and 12.3 million sharesoutstanding. The Lexington, Mass. company is spendingabout $1.2 million per month.

Hambrecht & Quist LLC, Lehman Brothers Inc.,Montgomery Securities and UBS Securities Inc. willunderwrite the offering. They have been granted anoverallotment option to purchase 450,000 additionalshares. The first 380,000 of those shares would be sold bythe company; the remaining 70,000 would be sold bycurrent shareholders.

AutoImmune's last financing was private placement ofabout $2 million shares, at $4.50 apiece, that raised $9million. Its stock (NASDAQ:AIMM) was trading at$5.06 when that deal was announced in January. OnFriday, AutoImmune closed at $11.75, down 13 cents.

The public offering is being made when the company'scash position, its stock price and the market conditions allappear to make the timing favorable.

Patient enrollment was completed in March for a 500-patient Phase III trial of the company's lead product,Myoral _ a myelin formulation made from bovine brains_ for the treatment of multiple sclerosis. Results shouldbe available in two years.

Earlier this month the company announced encouragingresults from a Phase II dose-ranging study of Colloral, aproduct made from chicken collagen, for rheumatoidarthritis.

AutoImmune's programs are based on its oral tolerancetherapy, which attempts to reduce autoimmune attacks byfeeding the patient proteins derived from the area underattack.

AutoImmune and Eli Lilly and Co., of Indianapolis, arecollaborating on the development of oral tolerance drugsto treat Type I diabetes. AutoImmune could get up to $20million in milestone payments in the collaboration. n

-- Jim Shrine

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