By Aaron Lorenzo

ILEX Oncology Inc. sold 5 million shares in a public offering that grossed about $120 million, a portion of which will go to Millennium Pharmaceuticals Inc.

CIBC World Markets Corp., UBS Warburg LLC and U.S. Bancorp Piper Jaffray Inc. acted as managing underwriters for the offering. They have an option to purchase up to an additional 750,000 shares to cover overallotments. The shares sold at $24 each.

ILEX registered the shares late last month in conjunction with the restructuring of its joint venture with Millennium for Campath. They dissolved their 50-50 joint venture, Millennium & ILEX Partners LP, giving ILEX the venture¿s share of Millennium¿s 33 percent stake for payments that could total $140 million.

ILEX, of San Antonio, earmarked a number of areas to which it will apply the approximately $112 million in net proceeds. According to its most recent quarterly report, ILEX intends to use up to $60 million of its existing cash in the next two years to pay off Millennium, of Cambridge, Mass. Campath was developed by the evenly split joint venture, as well as Schering AG, of Berlin. Millennium previously acquired its rights to Campath through its December 1999 acquisition of LeukoSite Inc., also of Cambridge. Schering has worldwide sales and marketing rights, except in Japan and East Asia, and its U.S. arm in Richmond, Calif., Berlex Laboratories Inc., markets the product in the U.S. (See BioWorld Today, July 13, 2001.)

Campath was launched in the United States in May and in the European Union in August to treat patients with chronic lymphocytic leukemia.

In the agreement with Millennium signed last month, ILEX will include an initial cash payment of $20 million, with an additional $120 million in scheduled payments due to Millennium over the next three years, $20 million of which may be paid in shares of ILEX common stock. In the event that U.S. sales of Campath exceed certain levels beginning in 2005, Millennium will be entitled to additional payments based on those incremental sales. The transaction, which is subject to customary closing conditions, is expected to close on or before Dec. 31.

The balance of the proceeds from the offering will be used to expand clinical trials and preclinical research, for general corporate purposes and for working capital.

ILEX on Sept. 30 reported having about $172 million in cash and equivalents and 26.5 million shares outstanding.

Founded in 1994 as an oncology drug development company, ILEX is positioned to become an oncology-focused pharmaceutical company. In addition to Campath, ILEX¿s first drug approved for sale, the company features a pipeline of oncology compounds focused on the treatment of both advanced and early stages of cancer. Several product candidates are in various stages of clinical development, including apoptosis-inducing agents, cytotoxic compounds with novel mechanisms of action, angiogenesis inhibitors and chemoprevention agents.

ILEX¿s stock (NASDAQ:ILXO) closed Thursday at $24.35, down 64 cents.

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