Ista Shares Bring In $31.5 Million

Ista Pharmaceuticals Inc., which twice dropped the proposed price on its first public sale of stock, raised about $31.5 million late Monday by selling 3 million shares to its underwriters.

The stock, priced at $10.50 a share, is expected to begin public trading today under the ticker symbol ISTA on the Nasdaq market.

As a research and development company with no products yet, Ista has relied on investors such as Allergan Inc., the Irvine eye- and skin-care company that has pumped $10 million into Ista’s work in developing treatments for eye diseases.

Initially, Ista hoped to raise more than $57 million, after fees and expenses. About two weeks ago, the target for net proceeds was lowered to $35 million, according to filings with the Securities and Exchange Commission. Now, it expects to net $28 million, according to the filings.

Neither the SEC filings nor the company gave reasons for the revisions. Ista executives did not return telephone calls Monday.

Analysts have said that the company’s lack of products and its continued losses--a total of $45.3 million since January 1995--makes the initial public offering less appealing. And Ista has said in its SEC filings that it expects “significant operating loses” over the next several years.

Ista’s leading product candidate is called Vitrase, a treatment for diabetic retinopathy and vitreous hemorrhage. The former ailment is the leading cause of adult blindness in the nation, the latter is a sight-threatening condition.

Allergan has agreed to sell, market and distribute Vitrase worldwide, except in Mexico, for now, or Japan. Allergan would pay Ista a royalty on Vitrase sales abroad and split profits from U.S. sales.

Though Ista’s stock price failed to meet the company’s expectations, demand has been strong for biotech issues, said Richard Peterson, a market strategist for Thomson Financial Securities Data in Newark, N.J.

In the four-week period that ended Wednesday, a record 28 biotech offerings went public--nearly double any previous four-week figure in the sector. In addition, new biotech stocks this year were trading late last week at 53% above their asking prices, compared with an average of 24% for other IPOs, he said.

Ista said in its filings that it plans to use the proceeds to fund clinical trials and research, possible acquisitions and general corporate needs.

The group of underwriters handling the IPO are led by CIBC World Markets Corp., Prudential Securities Inc. and Thomas Weisel Partners LLC.