Xenogen Corp.'s initial public offering raised $29.4 million.

The Alameda, Calif.-based company priced 4.2 million shares at $7 apiece in the IPO, marking the 22nd U.S.-based offering in the biotech industry this year. The shares (NASDAQ:XGEN) traded up Friday, gaining 50 cents to close at $7.50 on volume of about 1.4 million.

All the shares were sold by Xenogen, an in vivo imaging firm that markets an integrated system of instruments and equipment, software and reagents for drug discovery and development. Its products include genetically engineered cells and bioluminescent animals, enabling them to display a tumor, disease, pathogen, organ or a biochemical reaction. Other offerings include the IVIS Imaging System, a set of cameras to detect emitted photons and create images and data files.

The company, whose officers were unable to comment due to SEC-imposed quiet-period rules, also granted underwriters an overallotment option to purchase 630,000 shares. San Francisco-based Thomas Weisel Partners LLC is serving as the offering's book-running manager. CIBC World Markets Corp., of New York, is co-lead manager, with JMP Securities LLC, of San Francisco, as co-manager.

Founded in 1995, Xenogen filed for its IPO three months ago. The registration actually marked its second attempt at raising public funds - the company first filed for an IPO in 2000 before pulling the filing the following April due to market volatility. (See BioWorld Today, April 7, 2004.)

It plans to use proceeds to expand its sales and marketing force, continue its research and development efforts and expand the manufacturing capacity for its IVIS Imaging System. The company also plans to use the funds to expand its portfolio of technologies and reagents, and also for working capital and other general corporate purposes.

Xenogen last raised private funds a year ago, bringing in $22 million to increase its total private funding to more than $100 million. (See BioWorld Today, July 14, 2003.)

As of Dec. 31, the company had cash, cash equivalents and short-term investments of $13.5 million. It also had about $20.8 million of revenue backlog for its products, licenses and services.

Xenogen earns revenue from sales fees, long-term service contracts and multiyear licensing fees for its biophotonic imaging technologies and the sale of light-producing transgenic animals, cell lines and reagents. It also offers contract research services for production of transgenic animals and knockout animals, as well as custom animal production and phenotyping services for target validation and compound screening.

More than a dozen other biotech companies remain in the IPO queue.