Staff Writer

Celgene Corp. said it is raising $325 million after agreeing to a private placement of convertible notes.

"We found that, relative to market conditions and an offer that was brought to us, it was a transaction that was very hard to turn down," Brian Gill, director of public relations and investor relations at Celgene, told BioWorld Today. "We also looked at our peers in the top-10 biotech community, and found that the average cash positions of these companies were in the $500 million to $600 million range. From that analysis, and this offer we received pretty much at the same time, it made good sense for us to take that. So we now have a nice war chest to help us achieve our long-term goals."

As of March 31, the Warren, N.J.-based company reported about $257 million in cash, cash equivalents and marketable securities. It said it would use the net proceeds for general corporate purposes.

Due in 2008, the notes bear interest at 1.75 percent annually. They would be convertible into Celgene common stock at a conversion price of $48.45 apiece, reflecting a 50 percent premium to the stock's May 28 closing price of $32.30, upon the occurrence of certain events. Gill said the terms of the offer were brought to Celgene from its unnamed suitors.

The terms are believed to include the highest conversion premium for a biotech issuer and the lowest coupon for a cash-pay convertible offering in the sector. The offering was said to be five times oversubscribed.

"It was a bought deal, so there was no risk to us," Gill said. "It speaks of the strength of Celgene, its senior management team, its science and its potential moving forward."

Celgene also granted the initial purchaser a 30-day option to buy an additional $75 million principal amount of the notes. The placement is expected to close June 3.

Also in the next week, Celgene plans to present data on its flagship product, Thalomid (thalidomide), and its analogue, Revimid (CC-5013), at the American Society of Clinical Oncology meeting that begins this weekend in Chicago. Gill said investigators would focus on blood-borne cancers.

Thalomid is used off-label for multiple myeloma, though it is approved for cutaneous manifestations of moderate to severe erythema nodosum leprosum (ENL) in leprosy and for maintenance therapy for prevention and suppression of cutaneous manifestations of ENL recurrence. It remains in Phase III studies in multiple myeloma and untreated, metastasic and renal cell carcinoma.

Revimid is in Phase III trials for relapsed and refractory multiple myeloma as well as in metastasic melanoma, while a Phase II study continues in myelodysplastic syndrome. The FDA granted the product fast-track status for multiple myeloma and myelodysplastic syndrome.

There is no FDA-approved therapy for the latter indication, a malignant blood disorder.

Celgene has about 84 million shares outstanding. Its stock (NASDAQ:CELG) fell $1.90 Thursday to close at $30.40.