Shaman Pharmaceuticals Inc. announced Monday that it hasfiled an initial public offering (IPO) of 2.5 million shares ofcommon stock at $13 to $15 per share, with an underwriters'option for an additional 375,000 shares to coveroverallotments.

Gary Fischer, Shaman's chief financial officer declined commenton details of the offering while the company is in registrationwith the Securities and Exchange Commission (SEC).

S.G. Warburg Securities of New York and The First Boston Corp.are co-managing the offering.

Shaman was formed in May 1989 with about $250,000 in seedmoney. It has since raised more than $23.1 million in threerounds of private financing. The most recent, last August,raised $10 million from investors that included Invesco TrustCo., Hambrecht & Quist Life Science Healthcare Investors, TheTraveler Companies, Fostin Capital and Prim Ventures,Technology Funding Inc., Delphi BioVentures, Elf Technologyand Calvert Social Venture Fund.

According to Michael Baldock of S.G. Warburg, Shaman hadapproximately $12 million cash on hand as of Sept. 30. Theprospectus filed with the SEC shows a net loss of $11.7 millionfor the company since its inception, he told BioWorld.Depending on the price of shares sold, the company stands tobring in from $32.5 to $37.5 million from the offering. Proceedswill be used to fund research and development.

The San Carlos, Calif., company's lead compound, SP-303, hasbeen tested in a Phase I trial in more than 40 patientssuffering from respiratory syncitial virus (RSV), a childhooddisease. Shaman claims that SP-303 has shown activity, both invitro and in vivo, against parainfluenza virus and influenza Aand B. Also in clinical trials is a topical anti-viral treatment forherpes 1 and 2 and an anti-fungal agent is in late preclinicaldevelopment.

The company estimates the U.S. market for an RSV product tobe $140 million and the global market for respiratory diseasesand herpes virus to be as large as $1 billion.

Shaman (the company's name means medicine man) specializesin developing pharmaceuticals from tropical plants, and utilizesthe knowledge of ancient, indigenous peoples on threecontinents to select promising therapeutic candidates that thecompany then develops. SP-303 is a compound isolated from aplant used for thousands of years by villagers in Ecuador andPeru to treat colds, flus and open sores.

Shaman uses ethnobotany -- which has been called a mixtureof anthropology, biology, ecology, pharmacology and medicine-- to reduce the time involved in randomly screening plants fortherapeutic activity.

A low-tech approach to drug discovery, ethnobotany relies onancient knowledge passed from generation to generation ofhealers and pharmacists from cultures in Africa, South Americaand Southeast Asia. The company will pursue a compound onlyafter ethnobotanists have documented its therapeutic use inthree unconnected communities. Shaman then chemicallyisolates the compound and tests its pharmacological properties.

Shaman has entered into two major research and developmentdeals. In October, Eli Lilly and Co. made a $4 million equityinvestment (a 6.5 percent stake) in the company and signed afour-year renewable agreement to fund the development ofplant extracts demonstrating anti-fungal activity. In return,Lilly will have exclusive worldwide marketing rights to certainanti-fungal products. In October 1991, Inverni della Beffa, apharmaceutical company based in Milan, Italy, which alsodevelops botanical-based drugs, made an undisclosed equityinvestment in Shaman. The Inverni deal gives the Italiancompany non-exclusive rights to market SP-303 in Italy and tomanufacture SP-303.

-- Lisa Piercey Business Editor

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