Sequana Therapeutics Inc. apparently deemed the market receptive toan initial public offering (IPO) as it registered Wednesday to sell 3million shares of stock at $12 to $14 apiece. The company madeitself more attractive by also announcing a potential $70.5 millioncollaboration with Boehringer Ingelheim GmbH in the area ofasthma.

Sequana, a gene-discovery company in La Jolla, Calif., initially willget an equity investment of $6 million from Germany-basedBoehringer Ingelheim (BI). Payments _ in the form of license fees,research funding and milestones _ could reach $32.5 million in thefive-year research phase of the collaboration. And another $32million could be made by Sequana in developmental milestones.

Boehringer Ingelheim gets exclusive worldwide rights to develop andcommercialize therapeutics based on genes discovered in thecollaboration. Sequana retains rights to diagnostics.

Sequana now has three major collaborations, as well as threeunpartnered programs in the areas of schizophrenia, obesity andinflammatory bowel disease. Last year the company and London-based Glaxo plc started working together in the area of Type IIdiabetes, and in May Bermuda-based Corange International Ltd. paidSequana $2 million for an exclusive option in the area ofosteoporosis. That option expires at the end of this month.

Sequana executives could not comment on Wednesday's news as thecompany is in a quiet period following registration.

Boehringer Ingelheim also has been busy _ this deal marks its thirdsignificant biotechnology collaboration of 1995. In March a dealpotentially worth $100 million was struck with Isis PharmaceuticalsInc., of Carlsbad, Calif., with a focus on cell adhesion research anddevelopment; and in January the German company and CambridgeNeuroscience announced their intention to collaborate in a potential$43 million deal for the development of Cerestat, the biotechcompany's drug for stroke and head trauma.

In the area of asthma, Sequana has identified two genomic regionsthat the company believes contain a gene associated with the disease.Sequana is physically mapping the regions, has identified a candidatedisease gene and begun the process of sequencing and searching formutations in the gene, according to its prospectus.

Sequana would have about 8.5 million shares outstanding if 3 millionshares are sold in the IPO. The company reported $15.6 million incash and equivalents as of March 31 (which doesn't include the $6million equity investment).

The IPO market for biotechnology-related companies has beenmostly dry since last spring. This year OraVax Inc., of Cambridge,Mass., completed a $23 million IPO on June 8. Ostex InternationalInc., a diagnostics firm, raised $33.25 million in February andSunPharm Inc., a Jacksonville, Fla., drug developer, raised $7.7million in January.

Sequana would gross between $36 million and $42 million if its IPOgoes off as planned.

Eric Hecht, an analyst with New York-based Morgan Stanley & Co.,said the recent run of good news in the industry doesn't mean themarket is ready to support biotechnology IPOs like it did in pastyears. "Is [the market] frothy? No. Is it a market where deals can bedone? Possibly," Hecht said, "if it's the right company."

Sequana sees itself not as a biotechnology company but as a providerof information to pharmaceutical partners. It doesn't share thedevelopment risks faced by many in the industry. Still, a gene-discovery company likely will be considered part of the sector by themarket.

Lehman Brothers Inc. and Hambrecht & Quist Inc., both of NewYork, are managing the offering. The proposed symbol is SQNA. n

-- Jim Shrine

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