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Executive Summary

MAGAININ TARGETS MSI-78 TOPICAL ANTI-INFECTIVE IND FOR EARLY 1992, the first IND filing the company expects to make in a strategy intended to "accelerate the commercialization of its host-defense technology." MSI-78 is a broad-spectrum anti- infective that has been shown in preclinicals to be effective against "methicillin-resistant Staphylococcus aureus and gentamicin-resistant Pseudomonas aeruginosa," Magainin Pharmaceuticals reported in an initial stock offering prospectus filed with the Securities & Exchange Commission Oct. 24. Magainin, which is based in Plymouth Meeting, Penn., is developing a wide range of therapeutics for infections, certain cancers and the promotion of wound healing. The biopharmaceutical start-up's research focus are "magainins," or "shorter-chain peptides, which can be synthesized chemically as well as by recombinant technology," the prospectus states. Magainin peptides "twist" into two-sided helices, creating an outer surface that is soluble in cell membranes and an interior that is soluble in water. When absorbed into cell membranes, magainins create a "tunnel" by which water and water-soluble magainin ions can flow into cells, killing pathogens, the prospectus explains. The company further claims that magainins "display specificity in distinguishing infectious pathogens and cancer cells from ordinary, healthy cells." Magainin's R&D pipeline includes five anti-infectives, two wound healing agents and two anticancer compounds. In addition to MSI-78 for dermatological infections, Magainin's anti-infectives include MSI-239, which has been shown in vitro to kill bacteria and other organisms known to cause serious eye disorders, the prospectus notes. MSI-239 and another ophthalmic anti-infective are in in vivo preclinicals. The company also has a mouthwash or toothpaste for periodontal disease at the in vitro stage, and a targeted delivery agent in animal testing as an oral treatment for antibiotic-associated colitis. All of Magainin's wound healing and anticancer agents are in animal testing. They include a topical solution for ophthalmic wound healing, a systemic or intramuscular injection for general wound healing, a topical agent or local injection for malignant melanoma and a systemic or intraperitoneal agent for ovarian carcinoma. The initial public offering of 2 mil. shares at an estimated price of $ 10-$ 12 per share would net Magainin about $ 20 mil. A "substantial portion" of the proceeds will be used to fund R&D, "including additional preclinical studies and clinical trials," the prospectus states. The proceeds also will go for working capital and general corporate purposes. The IPO is being underwritten by Smith Barney, Harris Upham and Tucker Anthony. The prospectus notes that Magainin currently has no commitments or arrangements, including banking arrangements, through which it can obtain additional funding. However, preferred stockholders have agreed to provide $ 3 mil. in credit, $ 1 mil. of which the company anticipated it would borrow during November. Altogether, Magainin estimates that the offering, in conjunction with other available cash, revenue and interest income, will meet its capital requirements for the next 18-24 months. Magainin, which was incorporated in June 1987, is approximately 52% owned by Health-Care Ventures I & II. The venture capital funds' ownership share will drop to about 37% post-offering. Magainin is based on research by Michael Zasloff, MD/PhD, a former National Institutes of Health researcher, who is now the chief scientific advisor. Magainin's president and CEO is Jay Moorin, who formerly was a managing director at Bear Stearns before joining the company in April. Exec VP Leonard Jacobs, MD/PhD, joined the company from Smith Kline & French Labs in 1989.

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