British Bio-technology Group plc announced a $50 million initialpublic stock offering that the company hopes will lureinvestors on both sides of the Atlantic.

The Oxford, England, company expects to sell 2 million sharesof its planned 7.5 million-share offering in the United Statesthrough a offering of ADRs (American Depository Receipts). TheADRs, each of which represents to two BBG shares, are expectedto sell in a range of $14.64 to $16.47 at a currency exchangerate of $1.70 to one British pound. After the IPO, the ADRswould trade under the NASDAQ symbol BBIOY.

The combined offering, including the U.S. and Europe, of 7.5million shares represents about 21 percent of BBG's 36.2million shares outstanding following a successful IPO. In theexpected share-price range, the IPO would give BBG anindicated market value of more than $280 million.

According to its IPO prospectus, BBG has two products inclinical trials, with another scheduled to enter trials thissummer, all in the United Kingdom. They include:

-- BB-94, a matrix metalloproteinase inhibitor that is in PhaseI/II trials as a means to slow the metastisis of malignanttumors, in this case breast cancer.

-- p24-VLP (for virus-like particle), a post-HIV infectionimmunotherapeutic designed to delay the onset or slow theprogression of AIDS. Final results of a Phase I study on HIV-negative volunteers is being evaluated.

-- BB-882, a platelet-activating factor antagonist, is scheduledto enter a Phase I study in August as a treatment of chronicinflammatory conditions, such as asthma.

Formed in 1986, BBG is developing therapeutic products totreat conditions in four medical areas: inflammation, cancer,vascular diseases and immunotherapy for viral diseases.

The company posted an $11 million loss for the 1991 fiscalyear, ended April 30, the prospectus states. An existingdiagnostics and reagent business contributed the bulk of $9.4million in revenues during the same period. The companyaccumulated $35.2 million in losses from its start-up in early1986 until last Jan. 31.

The unusual approach of simultaneously taking a companypublic in both the United States and United Kingdom is worththe added complexity of meeting British and U.S. security lawrequirements, said James Noble, the company's chief financialofficer.

Despite the recent slowdown in the U.S. IPO market, BBG'sappearance in the American market should make the stockmore appealing in Europe, Noble said. The U.K. financialmarkets offer few examples of successful biotechnology IPOsthat would instill confidence in British investors. "It helps thatthe stock is going into a real sector" on NASDAQ, Noble said. Infact, BBG aims to become the first pure-play biotechnologystock listed on the London Stock Exchange.

Noble, who worked for a British investment banker beforejoining BBG, downplayed the legal and accounting complexitiesof preparing a combined offering. The big difference is that "wehave four sets of lawyers at all meetings" instead thecustomary two sets representing the company and itsunderwriters. One advantage of the U.K. offering is that Britishunderwriters collect a 5 percent commission on such offeringsvs. the customary 7 percent commission for U.S. firms.

BBG already has a following in the U.S., where it has 10American venture capital firms and about 80 private investorsamong its existing shareholders, Noble said. Together, U.S.investors hold more than 25 percent of BBG stock. A privatestock placement in June 1991 that raised about $70 million forthe company accounts for much of that presence.

Other major investors in BBG are SmithKline Beecham plc.,Johnson & Johnson, Chugai Pharmaceuticals Inc. and JT's(Japanese Tobacco) pharmaceutical division, which togetherhold an approximately 15 percent equity interest in BBG, Noblesaid.

Underwriters of the U.S. offering, led by the New York offices ofMorgan Stanley & Co. and Hambrecht & Quist Inc. of SanFrancisco, and the manager of the offering in Europe haveoverallotment options to purchase an additional 1.1 millionshares. The IPO also can be expanded, if demand warrants, tomore than the 5.5 million shares now planned for sale in theUnited Kingdom, Noble said. The offering is being managed inEurope by Kleinwort Benson Ltd.

-- Ray Potter Senior Editor

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