Big doses of capital cure cash deficiency.

• Position: North Carolina's pharmaceutical industry - Industry Overview

In May, Novalon Pharmaceutical Corp. of Chapel Hill raised $1 million by selling a small piece of itself to a Massachusetts pharmaceutical company. Cubist Pharmaceuticals Inc. also got an option to buy the rest of the fledgling company and its protein-screening technology after six months.

It never happened. In September, a Swiss investment fund kicked in $6 million. Novalon bought back Cubist's stake for $2 million and had $5 million left over for R&D. "We were exuberant," says Clay Thorp, director of business development.

That was a common feeling among small Tar Heel drug companies. "They're raking in the money," says Barry Teeter of the Research Triangle Park-based North Carolina Biotechnology Center. Before the year was half over, biotech companies had pulled in more than two-thirds as much venture capital as the $47.6 million raised in all of 1996. Durham-based Inspire Pharmaceuticals Inc., a 3-year-old developer of lung-disease drugs, hauled in $13 million, believed to be the biggest venture-capital take ever by a Tar Heel biotech company.

The profusion of transfusions was helped by a stock market that gives early investors a chance of getting a healthy return when a company goes public. Durham-based Trimeris Inc., which is developing two AIDS drugs, raised $30 million with a public offering in October.

Private companies weren't the only ones cashing in. Last spring, Durham-based Triangle Pharmaceuticals Inc. sold $30 million of new stock to investment funds owned by billionaire George Soros, which should raise its profile on Wall Street. Triangle added another AIDS-drug candidate to its stable through the purchase of Pennsylvania-based Avid Corp. in August.

Young drug companies wish finding lab space was as easy. The growing number of start-ups has caused a shortage, especially in the Triangle. Two lab buildings being built at N.C. State University - 60,000 square feet due this summer and an additional 80,000 in August 1999 - should help ease the crunch. So should 38,000 square feet in Research Triangle Park abandoned last summer by the National Institute of Environmental Health Sciences, which consolidated its scientists in another building.

Lab space was no problem for London-based Glaxo Wellcome PLC, the world's second-largest drug maker - deciding who will run the company was. In October, U.S. chief Robert Ingram was promoted to CEO just nine months after rival Sean Lance had become heir apparent. He not only leapfrogged Lance...