By Mary Welch

Staff Writer

Millennium Pharmaceuticals Inc. intends to raise at least $250 million by offering convertible subordinated notes to advance 10 products through clinical trials this year.

"We are doing a convertible offering of our common stock instead of other means of raising money because that is where the market is today," said Kevin Starr, Millennium's chief financial officer. "It's part of our bullish outlook on our stock. We think having the opportunity to sell equity at a premium is better than selling shares at where the market price is today. It's a positive outlook."

Although the shares will be priced by week's end, Starr said an undisclosed premium would be charged. If the placement were set at Monday's closing price of $167.75, about 1.5 million shares would have been involved. The offering will be made available to institutional buyers. The notes will be convertible into common stock. The deal should close by the end of the month.

"We won't know the final numbers for a few days, but it'll end up between 1 [million] to 2 million shares, which is about a 2 [percent] to 4 percent dilution of the stock," Starr said. "There also is the possibility of an overallotment, which could take it as high as $350 million."

While the placement won't involve a large percentage of the Cambridge, Mass.-based company's equity, it will help to advance the company into a new direction.

"What you are seeing, and what we'll be doing with the placement, is moving a massive pipeline and going way ahead of our peers in being a solid and stable emerging pharmaceutical company," he said. "We are going from a small company that developed early-stage products to one that will have 10 products in the clinic, two on the market, 10 more in preclinical and dozens more ready. This will change the perception of Millennium based on the sheer volume of our pipeline. It will be bigger than all the other companies in biotechnology."

The two products Millennium hopes to have on the market this year are Melastatin to treat melanoma and Campath to treat advanced B-cell chronic lymphocytic leukemia. Melastatin is a protein encoded by a human gene Millennium identified in 1994. Millennium's partner, Becton Dickinson and Co., of Franklin Lakes, N.J., expects to launch the product in the first half of this year.

Campath, a monoclonal antibody, was developed through a 50-50 joint venture between LeukoSite Inc., of Cambridge, Mass., and Ilex Oncology Inc., of San Antonio. A biologics license application was filed last month for Campath to treat advanced B-cell chronic lymphocytic leukemia that is refractory to existing therapies. (See BioWorld Today, Dec. 27, 1999, p.1.)

In a $30 million deal, Schering AG, of Berlin, assumed distribution and marketing rights to Campath in the U.S., Europe and everywhere else, besides Japan and East Asia. (See BioWorld Today, Aug. 25, 1999, p.1.)

Millennium acquired the rights to Campath when it purchased LeukoSite in a stock-for-stock deal valued at about $635 million. (See BioWorld Today, Oct. 15, 1999, p. 1.)

Among the other drugs in the advanced stages of clinical trials that were acquired from LeukoSite are LDP-02 for inflammatory bowel disease, LDP-01 for stroke, LDP-977 for asthma, LDP-341 for cancer and LDP-519 for stroke. LDP-02 is partnered with Genentech Inc., of South San Francisco. LDP-977 was recently partnered with Taisho Pharmaceutical Co. Ltd., of Tokyo, for marketing rights in Japan, Asia and Europe.

On its own, Millennium has more than $1 billion in potential partnership funding. It has products in development in the fields of obesity and Type II diabetes, fungal diseases and select cardiovascular diseases.

"With this placement we will have a half a billion dollars in cash by the end of the year," Starr said. "We will have $2 billion in total alliance funding for 2000. We have a burn rate of zero percent and an operating loss of $50 million per year. This can cover us for many, many years. We might also use this money to aggressively fill in our pipeline as well through acquisitions, in-licensing or other means. We're in a very unique category and it allows us to control our own destiny."

Millennium's stock (NASDAQ:MLNM) closed Tuesday at $152.843, down $17.656.