Houghten Pharmaceuticals Inc., a San Diego start-up with severalcorporate alliances and a lead product in Phase II trials for cancerpatients' pain and chemotherapy side effects, expects to raise about$36 million in an initial public offering (IPO).

Houghten, a combinatorial chemistry company, registered Thursdayto sell 3 million shares in a projected range of $11 to $13 per share.Following the IPO, the company will have about 11.8 million sharesoutstanding.

As of Dec. 31, 1995, Houghten had $1.2 million in cash and a netloss for the year of $9.5 million.

Houghten has drug discovery collaborations with Novo Nordisk A/S,of Bagsvaerd, Denmark, Proctor & Gamble Corp., of Cincinnati,Cadus Pharmaceutical Corp., of Tarrytown, N.Y., and ImmunexCorp., of Seattle.

In October 1995, Houghten entered into a research collaboration withChromaXome Corp., a combinatorial biology company, to generatenew sources of compounds.

ChromaXome's technology mixes genes from differentmicroorganisms in bacterial hosts, such as Escherichia coli, toexpress unique biochemicals. Houghten intends to use the moleculesto generate new libraries of compounds, which can be screened fortherapeutic activity against disease targets.

Houghten, founded in 1990, also is using its combinatorial chemistryto develop its own drug candidates. The most advanced, HP 228, is acytokine regulating agent, which is being evaluated in a Phase II trialto reduce pain and combat chemotherapy toxicities in cancer patients.

The small molecule compound, which may be applicable in treating abroad range of inflammatory diseases, is designed to restrain thenegative effects of cytokines, such as interleukin-1 (IL-1) and tumornecrosis factor (TNF), without disrupting their beneficial immunesystem functions.

Houghten's researchers have speculated HP 228 may affect theactivity of IL-1 and TNF by triggering production of interleukin-10,which is believed to be an anti-inflammatory cytokine.

The company also intends to evaluate HP 228 in clinical trials to treatobese Type II diabetes patients. Houghten filed an investigationalnew drug application in January 1996 with the FDA to begin a PhaseII trial. Studies of the compound in obese and diabetic mouse modelsshowed it was effective in reducing weight and in reversing insulinresistance.

Houghten has identified another cytokine regulating agent, HP 466,for potential clinical evaluation as a treatment for rheumatoidarthritis.

Underwriters for Houghten's IPO are Dillon Read & Co., Hambrecht& Quist LLC and Salomon Brothers Inc., all of New York. Theyhave an option to purchase an additional 450,000 shares to coveroverallotments in the 3 million share offering. n

-- Charles Craig

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