AtheroGenics Inc. is moving through the pivotal trial it needs to file for approval of its atherosclerosis drug and has now raised $80 million through a notes sale designed to provide funding for "the foreseeable future," it said.

The Atlanta-based company has agreed to privately place $80 million in convertible notes due 2008. Each $1,000 principal amount of notes will be convertible into about 65.2 shares of AtheroGenics' stock, valuing each share at about $15.34. That price represents a 22.5 percent premium to the closing price of AtheroGenics' stock Wednesday. The notes will bear interest at 4.5 percent annually. Initial purchasers have a 30-day option on another $20 million worth of notes. The placement is expected to close Tuesday.

"The window was open and with $61 million in cash at the end of the second quarter, we felt it was prudent to raise it now," said Mark Colonnese, senior vice president, finance and administration, chief financial officer at AtheroGenics. "The terms were very attractive, and we had an ability to raise money at a premium to our stock price."

AtheroGenics' stock (NASDAQ:AGIX) fell 37 cents Thursday to close at $12.15.

The funds will be used for the company's research and development programs, Colonnese said - specifically naming the AGI-1067 pivotal trial in atherosclerosis - as well as for general corporate use.

"There shouldn't be a requirement for us to raise money for some time down the road," he told BioWorld Today.

The company's lead product, AGI-1067, is in its largest and most important trial to date - the ARISE (aggressive reduction of inflammation stops events) study in atherosclerosis. The trial is measuring for a variety of outcomes, such as death due to coronary disease, myocardial infarction, stroke, coronary revascularization and unstable angina in coronary heart disease patients. Scheduled to enroll 4,000 patients across three continents and four countries, the trial is expected to be the only one AtheroGenics needs to file for regulatory approval. (See BioWorld Today, Jan.15, 2003.)

"The Phase III started at the end of June," Colonnese said. "We received FDA protocol approval [earlier this year] on one pivotal Phase III trial."

The drug is a vascular protectant designed to block the expression of VCAM-1, or vascular cell adhesion molecule-1, and thus work to reduce inflammation in blood vessel walls, which is a cause of atherosclerosis. The company also has it in a Phase IIb trial in atherosclerosis and post-angioplasty restenosis. The 12-month, 500-patient trial, referred to as CART-2, has completed enrollment and is designed to evaluate the drug's effect on atherosclerosis as reflected by the change in plaque volume in coronary arteries.

AtheroGenics is in "active discussions" for a worldwide partner for the drug and would like to have a deal done by the end of the year. The trial should be completely enrolled by June 2004, with the last patient finishing the one year of dosing in June 2005. AtheroGenics would expect to file for approval later in 2005, Colonnese said.

Its rheumatoid arthritis product, AGIX-4207, has successfully finished a Phase II trial, and a dose-ranging Phase II is scheduled. AGI-1096, its transplant rejection product, has completed a Phase I study, and AtheroGenics would like to partner that product as well.

"We intend to partner this product because of the specialized nature of transplant rejection," Colonnese said, adding that the company has started discussions with interested parties.

AtheroGenics posted a net loss of about $12.3 million for the second quarter, or 34 cents per share. For the first six months of 2003, it lost about $23.8 million. Its weighted average shares outstanding for the quarter was about 36.6 million shares. The notes sale would bring its cash position to about $141 million with an option for another $20 million. With its bank account solid, AtheroGenics can focus on development.

"I think we've made a lot of progress in clinical programs this year," Colonnese said. "We've also begun a new asthma therapy we hope will be in the clinic next year. We're very pleased with the progress we are making."