Medarex Inc. took advantage of the note-friendly environment, raising $100 million through a convertible senior notes offering to institutional buyers.

The notes are due 2010, bear interest at 4.25 percent annually and initially will be convertible at the holder's option into shares of Medarex common stock. Each $1,000 principal amount of notes will be convertible into about 148.8 shares at about $6.72 per share, subject to antidilution adjustments. That initial conversion price is a 27.5 percent premium to the closing price of Medarex's stock of $5.27 Thursday. Medarex has granted the initial purchasers an option on another $25 million in notes. The placement is expected to close July 23.

Medarex's stock (NASDAQ:MEDX) rose 25 cents Friday to close at $5.52.

The market ushered through a double-digit number of notes offerings in June and already has seen more than $850 million raised in July through another six notes offerings not including Medarex's, according to BioWorld Snapshots. Medarex saw an opportunity to "give us some liquidity, so we decided to do that," said Christian Schade, senior vice president and chief financial officer at Medarex.

"It's priced to sell," he told BioWorld Today. "It was a marketed deal, a fully negotiated deal, and that was what the market was [Thursday]."

Schade said he expects the Princeton, N.J., company to release second-quarter earnings in early August. At the close of the first quarter, the company had $321.4 million in cash, cash equivalents and marketable securities, so with the offering and "before the greenshoe, we'll have another $100 million in cash," Schade said.

"We'll use it for general corporate purposes," he said, "which could be to repurchase our standard convertible bonds, and we'll use it to continue our product development portfolio."

Medarex also said a portion of proceeds will be used to buy U.S. Treasury security strips to collateralize the notes in an amount sufficient to pay the initial six interest payments.

The company has Osidem, partnered with Immuno-Designed Molecules SA, of Paris, in HER-2-positive ovarian cancer Phase III work with IDM's MAK cell therapy. It also has products in earlier clinical development with Genmab A/S, of Copenhagen, Denmark; Centocor Inc., of Malvern, Pa.; and Novartis AG, of Basel, Switzerland.

Alone, its lead product is MDX-010, a fully human antibody in multiple Phase II studies.

"Those are in melanoma and prostate cancer," Schade said. "We had initial Phase II results that were presented at [the American Society of Clinical Oncology meeting]." There are other studies under way, he said, and the company anticipates having data in the second half of this year, potentially followed by a pivotal trial.

The company also has MDX-010 in Phase I work for HIV, MDX-060 in Phase I studies for CD30+ lymphomas and MDX-070 and MDX-018 being studied in earlier-stage programs for prostate cancer and autoimmune disease, respectively.

Overall Sector Funding Similar To 2002 Totals

Looking at fund raising in 2003 stacked up against 2002, biotech companies have raised slightly less through mid-July 2003 than they had the year previous. Overall, from Jan. 1 through July 18 in 2002, biotech companies raised about $7.7 billion. From Jan. 1 through July 17 of this year, the sector has raised about $7.2 billion. In that time span in 2002, public companies - through private equity or debt deals - raised about $4.6 billion in financings; that number is up slightly in 2003, to about $4.7 billion. However, in 2002, a large portion of that sum came from Thousand Oaks, Calif.-based Amgen Inc.'s raising $2.5 billion in a convertible notes sales.