Antigenics Inc. has an agreement in place to raise $31.6 million through a sale of Series A convertible preferred stock to an existing shareholder who could raise his stake in the company to 18 percent.

Antigenics had about 39.4 million shares outstanding at the end of June. The buying shareholder, Brad Kelly, owns about 5.6 million shares, or 14 percent of Antigenics. Should he convert all of the Series A stock, his position would rise to about 7.6 million shares.

In this case, Antigenics said, it was Kelly who came calling.

"Mr. Kelly clearly has an understanding of our technology, and this level of confidence he has in Antigenics led to his decision to purchase these shares," said Sunny Uberoi, vice president of corporate communications at Antigenics. "He came to us late [Thursday] afternoon, and the team was pretty much working all night."

The sale is expected to close today. The stock will be nonvoting, will pay a 2.5 percent annual dividend yield and will have an initial conversion price of $15.81. The stock will be redeemable by the company at its face value after 10 years.

Antigenics' stock (NASDAQ:AGEN) rose 67 cents Friday to close at $15.67. It posted a net loss of $16.6 million in the second quarter and had $83.8 million in cash, cash equivalents and short-term investments as of June 30.

New York-based Antigenics' lead product in cancer is Oncophage. Constructed from a patient's tumor and based on heat-shock protein technology, the vaccine is designed to reprogram a patient's immune system to attack cells bearing the patient's specific cancer fingerprint. It's in late-stage now, but faces a blockade in the form of a FDA hold on clinical trial enrollment in Phase III trials - one in metastatic melanoma and one in renal cancer - placed in early September. The FDA is requesting more information on the product's potency, purity and identity, the company said. (See BioWorld Today, Sept. 4, 2003.)

At the time, Antigenics' said it needed six to eight weeks to respond to the FDA's request and wasn't able to offer further insight Friday.

"We're still on track to submit our product characterization data to the FDA between six to eight weeks," Uberoi told BioWorld Today.

The hold allows that enrolled patients in the trials continue treatment, so analysts have said the impact of the hold on development might be minimal. Uberoi said the renal cancer trial was fully enrolled at the time of the hold and the melanoma study was at the halfway point.

The company also is developing Oncophage - which has fast-track status and orphan drug designation from the FDA in metastatic melanoma and kidney cancer - in other indications, including colorectal and pancreatic cancer.

"We're about to launch trials in lung and breast cancer," Uberoi said. "We obviously already have two Phase III trials under way in kidney and melanoma. With all these trials within the organization - although we're very prudent with our cash - we need to prioritize our business and [the funding] allows us greater flexibility."

Antigenics has other products in development in the cancer field, all earlier stage than Oncophage, and it is progressing products in the infectious disease and degenerative disorder areas as well. It markets Leucogen, approved in the U.S. and Europe for feline leukemia.