Selling 5 million shares in a direct offering, Neose Technologies Inc. raised about $33.9 million Tuesday, money it will use for its research and development activities.

The Horsham, Pa.-based company sold each share at Monday's closing stock price of $6.77. The company's stock (NASDAQ:NTEC) rose more than 80 cents, or 11.8 percent on Tuesday, to close at $7.59.

"We're pleased to have the support of a number of existing shareholders and some important new shareholders as well," said Robert Kriebel, the company's senior vice president and chief financial officer. "The financing also included several members of the company's management. It was priced at [Monday's] closing bid price of $6.77, which means it was done with no discount."

The company expects to receive about $31.6 million in net proceeds from the offering. It plans to use some of those funds for facility renovations, capital expenditures, potential acquisitions and general working capital. Most of the money will go toward the company's development work.

"The use of proceeds is to further ongoing research and development activities to support process development and for conducting preclinical and clinical progress associated with our proprietary proteins, specifically EPO and G-CSF," Kriebel told BioWorld Today.

Neose is working on two internal development programs. The first is for an improved version of the red-blood-cell-stimulator erythropoietin (EPO). The company is conducting preclinical activities with EPO and plans to submit an investigational new drug application in the second quarter of next year. Neose also is working on an improved granulocyte colony-stimulating factor (G-CSF), which stimulates white blood cells and is approved for neutropenia associated with chemotherapy. It plans to submit an IND for that product, also in 2005.

New York-based firm JP Morgan Securities Inc. acted as lead placement agent and UBS Investment Bank, also of New York, acted as co-placement agent for the direct offering. The 5 million shares were drawn down from a shelf registration filed in June for the sale of up to $75 million in common stock.

"We had almost $45 million in the bank at the end of March," Kriebel said, "so obviously the proceeds significantly augment those resources."

The company had total operating expenses of $10.7 million in the first quarter. At that rate, between its cash and the latest offering but not including any revenues, Neose has enough money to take it into the first quarter of 2006. The company has about 19.9 million shares outstanding.

Neose is built on its GlycoAdvance and GlycoPEGylation technologies. GlycoAdvance uses enzymes to complete the sugar chains on glycoprotein drugs, protecting them from rapid uptake by the liver and extending protein half-life. GlycoPEGylation also extends and customizes protein half-life by linking various sized polyethylene glycol polymers to glycans remote from the protein's active site. The company uses its technology for its internal programs for EPO and G-CSF, as well as for collaborated products and those products belonging to strategic partners.

The company in November converted a 2002 research and development agreement with Novo Nordisk A/S, of Bagsvaerd, Denmark, into two formal licensing agreements, worth $55.6 million combined, in which Neose would apply its GlycoPEGylation technology to develop three next-generation proteins within Novo's therapeutic areas. Novo took on the responsibility of research and development funding, and Neose is entitled to royalties on potential sales, as well as milestone payments. (See BioWorld Today, Nov. 19, 2003.)

The company entered an agreement last August with Sandoz, a unit of Basel, Switzerland-based Novartis AG, to use its technologies with an undisclosed therapeutic recombinant protein. And in October, it signed a similar agreement involving an undisclosed protein with Rentschler Biotechnologie GmbH & Co. KG, of Laupheim, Germany.

In April, Neose entered two more agreements, one with BioGeneriX AG, of Mannheim, Germany, to use GlycoPEGylation technology to develop a long-acting, next-generation version of G-CSF. BioGeneriX gained commercial rights in Europe and other parts of the world outside of North America and Japan. The second agreement was with Rockville, Md.-based MacroGenics Inc. for Neose to apply its technologies to MacroGenics' compounds.