West Coast Editor

To pay off debts and proceed with business, Scios Inc. said it plans to offer $125 million in subordinated convertible notes, plus up to $18.75 million more as overallotments.

The notes would be convertible at any time from issuance to maturity into common stock, but the conversion price has yet to be determined.

Company officials declined to comment.

Scios, which launched Natrecor (nesiritide) a year ago when the human B-type natriuretic peptide was approved for congestive heart failure and sold $14.1 million in 2001, also has a Phase IIa trial under way with SCIO-469, its oral p38 kinase inhibitor for rheumatoid arthritis. (See BioWorld Today, Aug. 14, 2001.)

As of July 23, the study with the latter drug had enrolled 42 out of 120 patients who have active RA and are receiving methotrexate. The main objective of the study is to evaluate the safety and tolerability of six escalating doses, with results expected in the first quarter of next year.

Scios also said it has identified SCIO-323, a more potent second-generation p38 kinase inhibitor, that is moving through preclinical development.

In the second quarter of this year, Natrecor chalked up $22.5 million in sales, and $37.9 million for the first half of the year, and Scios estimated third-quarter sales at $23 million to $25 million, with sales for the year topping out between $80 million and $95 million.

The company said it still is enrolling patients in its Follow Up Serial Infusions Of Natrecor, or FUSION, study, which is designed to evaluate the safety and tolerability of Natrecor in an outpatient setting for patients with chronic congestive heart failure who are at high risk for hospitalization. As of Tuesday, 135 of the targeted 210 patients had been enrolled.

In March, the company started work on a drug candidate to its pipeline that it said could become the first oral inhibitor of transforming growth factor-beta, the signaling protein that is produced in a range of diseases characterized by unregulated scarring and eventual organ failure. Scios said it believes TGF-beta may play a role in congestive heart failure, chronic obstructive pulmonary disease, liver cirrhosis and kidney disease.

Scios reported cash, cash equivalents and marketable securities (both current and noncurrent) of $101.3 million as of June 30, with about 46.5 million shares outstanding. It had a net loss of about $47 million for the first six months of the year.

Scios' stock (NASDAQ:SCIO) closed Friday at $29.46, down $1.29.