NEXAGEN SEEKING $14 MIL. TO FUND OLIGONUCLEOTIDE R&D IN 1994

NEXAGEN SEEKING $14 MIL. TO FUND OLIGONUCLEOTIDE R&D IN 1994 through an initial public offering of 2.75 mil. shares. The Boulder, Colo. firm could gross up to $47.4 mil. if the offering is priced at the proposed maximum of $15 per share. NeXagen has earmarked $14 mil. for R&D in 1994 and another $3.5 mil. for capital expenditures. The offering is being underwritten by Alex. Brown and S. G. Warburg. NeXagen is "engaged in the rapid discovery and development of novel oligonucleotide-based pharmaceuticals," a Nov. 24 prospectus for the offering states. The company's core technology is called SELEX (Systematic Evolution of Ligands by Exponential Enrichment). NeXagen describes SELEX as "a process through which vast and varied oligonucleotide libraries are repeatedly subjected to selection and amplification until the most appropriate high affinity oligonucleotides aimed at a specific molecular target emerge from the repertoire." NeXagen maintains that SELEX "permits the incorporation of chemistries into each of the 10 starting sequences...so that the compounds selected at the end of the cycles have improved pharmacokinetic activity" and "require only limited optimization before such compounds can be utilized for initial efficacy testing and development." NeXagen licences SELEX from the University of Colorado. "To date, the company has utilized SELEX to identify compounds directed against more than 20 molecular targets," the prospectus states. Receptor targets include HIV replication proteins and growth factors implicated in cancer, restenosis and pulmonary fibrosis. NeXagen's most advanced project appears to be a basic fibroblast growth factor antagonist that is slated to begin animal studies in early 1994 as a potential bladder cancer therapy. The prospectus discloses four corporate partners for NeXagen: Lilly, Genentech, Becton Dickinson and Schering AG. Lilly and NeXagen are collaborating to develop ligands that bind to the enzyme PLA2 for possible use as anti-inflammatory agents. Under a September 1992 agreement, Lilly is funding the research and purchased a $3 mil. equity stake in the company that will translate into 3.9% of the company after the offering. Genentech supplies NeXagen with recombinant proteins as the basis of SELEX screens in exchange for a first option to license any resulting compounds under an August 1992 agreement. In July 1991, Genentech acquired 612,000 shares (5.4% post-offering) in exchange for 11 relinquishment of all rights and interests possessed by Genentech with respect to the SELEX technology." The agreements with Becton and Schering cover in vitro and in vivo diagnostics, respectively. Both companies purchased $5 mil. of equity as part of their three-year agreements. While NeXagen characterizes therapeutics as its primary research focus, the company believes that the diagnostics research may complement the therapeutic work. "NeXagen's goal would be to use these diagnostics as a means of choosing patients in clinical trials for specific indications to determine if that specific molecular target is playing a central role in the pathology of the disease before the drug is administered," the prospectus states. "In addition, these diagnostic tests could be used when marketing a product to ensure that the drugs are only administered to patients most likely to benefit from such intervention. Ultimately, NeXagen believes that such specificity will be a competitive advantage in a cost-containment environment." NeXagen was founded in March 1991 by Synergen founder and former Director of Research Lawrence Gold, PhD, who serves as its chairman. President and CEO Patrick Mahaffy was a VP at E. M. Warburg, Pincus, the venture capital founder of the firm. NeXagen has 75 employees.