Collagen Corp. said it intends to sell one-third of its stock inTarget Therapeutics Inc. to boost its cash reserves, and expectsto raise about $15 million after expenses from the deal.

In the form of a public offering, Target (NASDAQ:TGET) ofFremont, Calif., filed a registration statement on Friday with theSecurities and Exchange Commission for the sale bystockholders of 1,050,000 shares of common stock. CollagenCorp. (NASDAQ:CGEN) of Palo Alto, Calif., will sell 1,004,700shares. Target will receive no proceeds from the sale of theshares.

Target's stock closed down 75 cents a share on Friday to$24.50. Collagen was up 50 cents a share to $25.50.

Alex. Brown & Sons Inc., Kemper Securities Inc. and Punk,Ziegel & Knoell are the managing underwriters for the offering.

As of Sept. 30, Collagen had $11.2 million in cash and a burnrate of about $250,000 per quarter, according to David Foster,chief financial officer and vice president. "We had a little lessthan I think we'd like to have around," he said.

Foster said the funds will be used to ensure a successful launchof the company's Contigen and Collagraft products. "These newproducts will bring us pretty quickly into the black, and I don'tanticipate we'll need to do additional financing," he said.

Target was a majority-owned investment of Collagen until itwent public in January. It raised $37.8 million, and Collagen'sownership went from 86 percent to 52 percent. After theproposed stock offering Collagen's ownership will be down to36.2 percent.

"It's been a good relationship," said Larry Tannenbaum,Target's chief financial officer, "but we don't really need themnow. There's been a lot of interest from institutional investorsthat need larger blocks of Target to participate." -- MichelleSlade

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