West Coast Editor

Padding the coffers to finish up Phase III trials with its ultrasound contrast agent, Acusphere Inc. priced 900,000 shares of 6.5 percent convertible, exchangeable preferred stock at $50 per share, for net proceeds of about $41.5 million.

Net proceeds could go as high as $46.25 million, if underwriters exercise fully their overallotment option of 100,000 preferred shares.

The company's stock (NASDAQ:ACUS) closed Friday at $5.52, down 47 cents.

Each share of preferred stock has a liquidation preference of $50 per share and is convertible into about 7.28 shares of Acusphere's common stock, for a conversion price of $6.86 per share. Dividends will accumulate at the annual rate of $3.25 per share of preferred stock, payable quarterly.

Under the terms, if the closing price of the company's stock goes above $10.30 per share for at least 20 trading days during any 30-day trading period, the company may convert some or all of the preferred stock into shares of common stock.

Before March 1, 2009, if Acusphere or any other holder decides to convert, the company also will make a payment equal to dividends that would have been payable from the date of issue (less any dividends already paid). That payment can be in cash or shares or as a combination, at Acusphere's choice.

As of Sept. 30, the company had about $51 million in cash and cash equivalents.

John Thero, chief financial officer of Watertown, Mass.-based Acusphere, said the company was in a quiet period as mandated by SEC rules and referred questions to the prospectus related to the offering.

Net proceeds, along with existing resources, are expected to let Acusphere complete enrollment in pivotal Phase III trials with AI-700, which is designed to detect myocardial perfusion, or blood flow to the heart muscle, and to finish the follow-up on the required subset of patients.

Specifically, AI-700 is a dry powder made of perfluorocarbon gas-filled hollow microparticles mixed with sterile water and injected into the body before ultrasound imaging. No ultrasound agents to find myocardial perfusion are available, so physicians use the nuclear stress test, which takes longer and costs more.

Acusphere signed a deal with Nycomed Group, of Roskilde, Denmark, last summer for the European marketing rights to AI-700. The deal potentially is worth $70 million to Acusphere through license fees, research and development funding, and milestone payments. Acusphere plans to market AI-700 in the U.S., and both parties are aiming to file regulatory applications in the first half of 2006. (See BioWorld Today, July 8, 2004.)

In August, the firm leased commercial manufacturing space in Tewksbury, Mass., in order to meet initial commercial production needs for AI-700, which emerged from Acusphere's porous microparticle technology, which also yielded AI-850, a formulation of the cancer drug paclitaxel, and AI-128, an inhaled, sustained-release asthma compound that resulted from a since-terminated joint venture with Dublin, Ireland-based Elan Corp. plc.