The Liposome Co. Inc. on Friday said it netted $38.6 million in asecondary offering of 3 million shares of common stock pricedat $13.75 per share. The stock (NASDAQ:LIPO) closed down 38cents Friday at $14.

The proceeds will be used primarily to continue developmentand clinical testing of the Princeton, N.J., company's self-fundedproducts, including TLC-G65 and TLC C-53.

G-65 is a liposomal gentamicin to treat Mycobacterium aviumintracellulare, a common infection in AIDS patients. G-53 is aliposomal prostaglandin E21 being developed as a cell adhesionantagonist to treat inflammatory and vascular diseases.

After the offering, Liposome has 22.7 million sharesoutstanding. Underwriter Hambrecht & Quist Inc. has a450,000-share overallotment option.

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