By Mary Welch

Ariad Pharmaceuticals Inc. signed a definitive agreement with Acqua Wellington North American Equities Fund Ltd. for an equity financing facility of up to $75 million.

The shares can be sold anytime over the next 18 months at Ariad's discretion at a small discount to the market price. Separately, Ariad sold New York-based Acqua Wellington $8 million worth of stock in a private placement. The deal involved 680,851 shares sold at $11.75 each. Lehman Brothers Inc., of New York, acted as Ariad's financial adviser for both transactions. With the sale of those 680,851 shares, the company has 26.85 million shares outstanding.

"We have a commitment from Acqua Wellington, and the shares are already registered and are on the shelf," said Jay LaMarche, Ariad's chief financial officer. "We can sell the shares at our convenience, depending on the stock price."

The Cambridge, Mass.-based company filed for the shelf registration earlier this month for up to 3.5 million shares of stock.

"We have no way of knowing how many shares will eventually be purchased by Acqua Wellington or at what price," LaMarche said.

The company will release its second-quarter financial results Friday, so LaMarche refused to speculate how much cash the company had on hand. "Some analysts have guessed that we have about $34 million now, and with the $8 million from Acqua Wellington, we'll have about $40 million. Those are pretty good numbers."

LaMarche said he expects Acqua Wellington will sell some of the shares but will remain a large investor in the company. "Some other top-tier biotechnology companies, such as GelTex, Aviron and Isis, have entered into similar equity financing facilities with Acqua Wellington and they've worked out quite well," he said. "I believe Acqua Wellington was interested in us because they're interested in making an investment in life sciences companies and we're at the forefront of regulated gene therapy and signal transduction."

The money will be used to fund and possibly accelerate its clinical trials. The company's lead product, AP1903 - the first application of the company's ARGENT system - is in Phase II trials in Italy and is expected to enter trials this year at the Fred Hutchinson Cancer Research Center in Seattle. Both trials are to treat graft-versus-host disease in allogeneic bone marrow transplantation.

Ariad currently has 12 product candidates in various stages of research and development. "We expect to have one or two products enter Phase I trials next year," LaMarche said. "We are rapidly evolving into a development company, and this financing will help that aim. We also intend to use the proceeds to finance the acquisition of products, vectors and therapeutic genes that augment our core programs. It'll also help us in pursuing strong strategic partnerships."

Ariad has two platform technologies for regulated gene therapy. The Ariad Regulated Gene Expression Technology (ARGENT) system provides sustained, long-term delivery of proteins, such as erythropoietin (for treatment of anemia), interferons (for cancer and multiple sclerosis), and Factors VIII and IX (for hemophilia). Its Regulated Accumulation of Proteins for Immediate Delivery (RAPID) technology permits immediate, pulsatile delivery of proteins, such as insulin for diabetes and endorphins for pain.

Ariad's stock (NASDAQ:ARIA) closed Wednesday at $12.75, up 50 cents.

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