By Brady Huggett

MGI Pharma Inc. sold 4 million shares of its common stock to U.S. Bancorp Piper Jaffray Inc. for about $29.2 million, leaving MGI with 1 million shares on the shelf.

The funds will be used to increase MGI¿s line of cancer products, said Bill Brown, chief financial officer of Minneapolis-based MGI Pharma.

¿We are building a balanced oncology portfolio,¿ he said. ¿Specifically, the programs that will be targeted for these funds are irofulven and our compounds known as acylfulvenes.¿

Brown said the company expects its net loss for the year to be around $35 million to $45 million. Following the sale to Minneapolis-based Piper Jaffray, MGI has about 21 million shares outstanding. It had about $23.9 million in cash and equivalents on March 31.

¿We believe that with the investment and the cash we had on hand prior to this, plus we are in the process of out-licensing irofulven and the acylfulvenes in Europe, we should have enough capital to take us to the end of 2002,¿ Brown said.

The pricing of the shares, Brown said, was set by the parties and, after expenses, resulted in a payment of about $7.30 per share to MGI. The company¿s stock (NASDAQ:MOGN) fell $1.44 Wednesday, or about 14 percent, to close at $8.57.

MGI generated about $7 million in sales revenue in the first quarter, and posted a net loss for the same period of $3.1 million. In 2000¿s first quarter, MGI generated $4.6 million in sales revenue and had a loss of $9.5 million. The increase in sales revenue was mainly due to sales growth of its three marketed products: Salagen Tablets, Hexalen Capsules and Mylocel Tablets.

Last month, MGI licensed in palonosetron, a 5-HT3 antagonist, from Helsinn Healthcare SA, of Lugano, Switzerland, for $11 million in up-front payments. The chemotherapy-induced nausea product is in Phase III trials and should complete the trial in 2002. (See BioWorld Today, April 11, 2001.)

In February, MGI initiated a pivotal Phase III trial with irofulven in patients with pancreatic cancer. The trial will pit irofulven against 5-fluorouracil (5-FU), a salvage chemotherapy, and should enroll 300 patients. MGI said it would expect a new drug application based on the results in 2003. (See BioWorld Today, Feb. 8, 2001.)

MGI also has MG98, a second-generation antisense molecule, in Phase II trials. This trio of MG98, palonosetron and irofulven will receive the core of the $29.2 million, Brown said.

¿As part of developing our [oncology] portfolio, these three would be the primary targets for these funds and we are looking at bringing in additional products,¿ he said. ¿Our goal for this year is one additional oncology product.¿

The remaining 1 million shares sit on the shelf, to be taken down when deemed most appropriate, Brown said.

¿We don¿t have any current plans for additional financings, so we will simply be watching the capital markets and the development of our business as for the right time to go into the capital markets,¿ he said.

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