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Saturday, April 22, 2006 - Page updated at 11:13 AM

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Cancer-treatment company seeks $86 million IPO

By Seattle Times staff

Light Sciences Oncology of Snoqualmie filed plans late Friday to raise as much as $86.25 million in an initial public stock offering.

The company, which is developing a combination drug-device treatment for solid cancer tumors, did not specify a share price in its Securities and Exchange Commission filing.

In October, Light Sciences Oncology scored the state's largest venture-capital financing in several years, attracting more than $57 million from backers including the investment arms of major pharmaceutical companies Novo Nordisk and Johnson & Johnson.

Last fall the company was spun off from Light Sciences Corp., whose majority shareholder and primary investor is Craig Watjen, onetime head of Microsoft's treasury group.

Its treatment for solid tumors, called Litx, includes a flexible, light-emitting wand that is inserted into the tumor area, and a water-soluble drug that kills cells only where activated by the light. The drug has been approved in Japan, where it is currently marketed for the treatment of early-stage bronchopulmonary cancer.

Light Sciences Oncology initially will seek Food and Drug Administration approval to use its system in treating certain types of liver, colorectal and brain cancers. It expects to begin Phase III trials in all three areas this year.

After a drought of IPOs by Washinton life-sciences companies since 2004, Light Sciences Oncology is the second this year to attempt going public. Northstar Neurosciences of Seattle filed plans last month for an $85 million IPO.

According to its prospectus, Light Sciences Oncology believes that its approach to light-activated therapy has several advantages over current treatments. For one, "unlike conventional or even novel treatments for cancer, we believe tumor cells do not develop resistance to repeated Litx treatment," says the filing.

Light-activated cancer drugs are already available. But the Snoqualmie company says current makers of light-activated drugs typically don't provide the light source, so the regulatory approvals, sales and treatment are all more complex. And often the light source is a laser that clinics must purchase on their own for $75,000 or more, in contrast to the disposable light-emitting diode used in Light Sciences Oncology's system.

The company's innovations haven't come cheaply. Since 1995, when Light Sciences Corp. was founded, the accumulated deficit attributed to Light Sciences Oncology is $72.2 million. In the last five years it has spent $26.2 million on research and development, and those costs as well as other spending are expected to ramp up as Phase III clinical trials begin.

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The company doesn't expect to generate revenue "for at least the next several years," according to the filing. Rather than developing its own sales force to sell Litx, it aims to partner with larger companies that already sell to the oncology market.

If the stock offering is completed, the company expects to be listed on the Nasdaq National Market under the symbol "LSON." The underwriters are Cowen & Co., Wachovia Securities, Jefferies & Co., and Thomas Weisel Partners.

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