Liposome Technology Inc. raised about $14.5 million in a privateplacement of 2.1 million units consisting of one share of commonstock and one warrant for one-half share, giving the company 12months of cash as it awaits FDA approval of its lead product, Doxil.

The units were priced at $6.76 each and they were purchasedprimarily by U.S. and Asian investors, who were not identified. Thecompany said investors who hold stock for one year are eligible toredeem the warrants at $7.43 per share.

If all warrants were exercised the number of shares in the privateplacement would total about 3.2 million, giving LiposomeTechnology about 22.3 million shares outstanding. The $14.5 millionraised follows a $12 million financing last month and gives thecompany about $30 million in cash.

Donald Stewart, Liposome Technology's vice president of finance,said the company's expenses have averaged $2.5 million per month,or $30 million annually. But he added Liposome's burn rate willchange based on the anticipated FDA approval and marketing ofDoxil, (also called DOX-SL), for treatment of Kaposi's sarcoma inAIDS patients.

The FDA's Oncologic Drugs Advisory Committee in Februaryrecommended approval of Doxil as a second-line treatment forpatients who failed to respond to chemo-therapy. Stewart said the company expects to receive U.S. marketingclearance in the third quarter of this year.

"We believe there's nothing major that would hold up the [FDA]approval," Stewart said.

Liposome has filed for approval of Doxil in Europe as a first-linetherapy for Kaposi's sarcoma. Two weeks ago, the company releasedpreliminary data from a Phase III study showing Doxil outperformedthe standard three-drug chemotherapy treatment for the disease.

Doxil is a liposomal formulation of the anti-cancer drug, doxorubicinhydrochloride. The use of liposomes, coated with polyethyleneglycol, to deliver the anticancer drug allows it to remain in circulationlonger.

Stewart said Liposome is seeking corporate partners to market Doxilin Asia. In the $14.5 million private placement, some investorsreceived first rights to negotiate for participation in developing thedrug in that region.

Liposome Technology's stock (NASDAQ:LTIZ) closed Tuesday at$7.50, down 37 cents. n

-- Charles Craig

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