Procept Inc. has completed its initial public offering of 2.1million shares of common stock at $8.50 per share, raisinggross proceeds of $17.9 million.

Shares began trading last week under the NASDAQ symbolPRCT. Net proceeds from the offering, which was managed by D.Blech & Co. Inc., were approximately $16.4 million. Blech & Co.has the option to purchase up to 315,000 additional shares tocover any overallotments.

The completion comes more than a year after the offering wasfirst announced. The Cambridge, Mass., company, which wasformed in 1985, first registered for an IPO in January 1993.Procept then intended to offer 1.8 million shares at $11-13 pershare, which would have raised between $19 and $24 million.The offering was to be managed by Kidder, Peabody & Co. Inc.and Tucker Anthony Inc.

Stan Erck, Procept's president and chief executive officer, toldBioWorld that President Clinton's announcement of his healthcare reform plan and a general slump in the market for thebiotechnology industry led the company hold off on theoffering. The company maintained its registration with theSecurities and Exchange Commission throughout the year, filingan amendment in November 1993 as an update and a secondamendment in January, recording the new price of the sharesand notifying the SEC of its switch of underwriters.

Procept decided to change its underwriter to D. Blech & Co.,Erck said, because "they and their client base are focused onthis industry." The drop in the offering price of the sharesbetween last January and this year's closing, Erck said, was "areflection of the market."

Although last January was the biggest month of the year forfinancing among biotechnology companies, with total proceedsto the industry of approximately $443 million from initialofferings and follow-ons, Procept did not register for its IPOuntil the end of the month. Financing dropped off precipitouslyafter January, totaling $164 million in revenues, with only $25million of that investment going to companies making initialpublic offerings.

With the closing of the placement, the company has about 6million shares outstanding. Upon receipt of funds from theoffering, the company will have $19.5 million cash, saidMichael Higgins, the company's chief financial officer. Exerciseof the full overallotment would bring this to $22 million, henoted. Procept has a gross burn rate of $1.1 million per month,Higgins said, but revenue from its strategic alliances withSandoz and Bristol-Myers Squibb reduces the net burn rate toapproximately $300,000 per month.

Proceeds from the offering will be used for research anddevelopment, working capital and general corporate purposes.The company is developing small-molecule therapeutics for theprevention and treatment of immune system disorders,including arthritis, diabetes, organ transplant rejection andAIDS. Procept uses rational drug-design techniques to developmolecules that bind to certain T cell receptor proteins,inactivating them. The technology comes from the work of EllisReinherz, an immunobiologist at the Dana-Farber CancerInstitute, who has studied the role of the T cell receptor inmodulating the immune system.

Its lead product, PIC O24, is a small molecule that, during invitro testing, has bound to CD4 cells. It is being developed as anAIDS therapy. The company hopes to enter clinical trials thisyear. Procept also hopes to file an investigational new drugapplication in 1994 for PIC 060, a treatment for psoriasis.

-- Karl A. Thiel Associate Editor

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