Anergen Inc. has signed a letter of intent with two institutionalinvestors for the purchase of 7.32 million shares of its newly issuedcommon stock for $15 million.

The investors are Warburg, Pincus Ventures L.P. (a venture bankingfirm managed by New York-based E.M. Warburg, Pincus and Co.Inc.) and International Biotechnology Trust, an investment trustmanaged by Rothschild Asset Management Ltd., of London.

Anergen said the agreement, subject to various approvals, is expectedto be finalized over the next several weeks.

Anergen now has 7.44 million shares outstanding, and will have14.76 million after the transaction, giving the two new investors justover 49 percent of Anergen's shares. A condition is that the shares beheld for at least 180 days. Three other investors, which together willhold 19.5 percent of the shares after the offering, also agreed to thatstipulation.

John Varian, Anergen's vice president, finance and chief financialofficer, told BioWorld that one of the new investors will buy two-thirds of the new shares, and hold about 33 percent of thoseoutstanding. Both new investors also will get new seats on thecompany's board.

As of Sept. 30. Anergen, of Redwood City, Calif., reported nearly $6million in cash and equivalents and was spending $1.8 million to $2million per quarter, Varian said. "With this amount of funding, weestimate we have enough to get through 1996," he said.

"What's really nice about these two investors is that they are two ofthe most respected investors in biotechnology," Varian said. "Itmeans a great deal to us that they would think enough of ourtechnology and prospects to make a commitment of this size."

The per-share price of $2.05 was negotiated on Feb. 15 and based onthe average closing bid price on the stock (NASDAQ:ANRG) for theprevious 30 days, Varian said. The company's stock price hasincreased significantly in the past week or so, probably because of apublished report featuring the company, he said.

Anergen stock closed at $3.19 Thursday, down 6 cents per share.

Also Thursday, Anergen said a $7.5 million financing that was toclose in $1.5 million increments over 12 months was terminated, withonly one of the $1.5 million investments having closed.

"Neither we nor the investors was able to get an acceptable way ofgetting the shares registered for resale," Varian said. "Both of usdecided we would not go forward with the final four closings."

Anergen's lead product candidate is AnervaX, which is in Phase Itrials for rheumatoid arthritis. The dose-escalation study involvingfive treatment groups is expected to be completed this summer,Varian said. AnervaX, a synthetic peptide, is designed to elicit anantibody response to the major histocompatibility complex believedto be related to rheumatoid arthritis.

Anergen also is funding research evaluating AnervaX as a treatmentfor inflammatory bowel disease.

Another drug, AnergiX, is being developed in collaboration with theDanish company Novo Nordisk A/S. Specific disease targets of thepartners are multiple sclerosis, Type 1 diabetes and myastheniagravis.

Varian said Anergen and Novo Nordisk are focusing their efforts ongetting a multiple sclerosis product in the clinic, and aninvestigational new drug application could be filed in the thirdquarter. Anergen has received $10 million ($8 million in equity) of apotential $25 million since the collaboration was signed in August1993. n

-- Jim Shrine

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

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