By Karen Bernstein

Somatogen Inc.'s proposed $40 million offering of convertible exchangeable preferred stock is a bold move in a tough market. If the company pulls it off, it would be the largest public offering completed by a biotech company since CellPro Inc. sold more than $41 million of common in early February.

To pull it off, SMTG will have to explain the side effects seen in trials of its genetically engineered blood substitute in healthy volunteers, overcome concerns about the lack of data from patients, and provide a persuasive case for the significant future capital investments - and funding - that will be required to achieve commercialization.

Those issues were paramount in the minds of seven of the eight fund managers surveyed by BioCentury last week. None of the seven plan to participate in the offering.

1996 timeline

The company has been behind schedule in the clinic. Charles Scoggin, chairman, president and CEO, last fall said SMTG planned to file for marketing approval in 1995. The company now estimates the second half of 1996.