By Lisa Seachrist

Washington Editor

Minneapolis-based MGI Pharma Inc. is seeking $109 million in a public offering of 2.5 million shares.

The company registered the offering with the SEC to raise money for research and development, product commercialization, potential acquisition and general corporate purposes. In its prospectus, the company assumes the shares will sell for $43.69 apiece. The company's stock (NASDAQ:MOGN) closed Friday at $41.25, down $2.437.

The offering is being led by U.S. Bancorp Piper Jaffray, of Minneapolis, and co-managed by Banc of America Securities LLC and CIBC World Markets, both of New York. The underwriters have been given an overallotment option on 375,000 shares. Should the offering close at its assumed price and the entire overallotment option be exercised, the company will gross $125 million and have 17.8 million shares outstanding.

MGI is a company focused on the acquisition, development and commercialization of cancer and rheumatology drugs. The company's primary commercial product is Salagen Tablets for the treatment of dry mouth associated with head and neck radiation and Sjogren's syndrome, an autoimmune disease that destroys moisture-producing glands.

The company's lead clinical drug candidate is irofulven, one in a family of naturally derived compounds called acylfulvenes. Irofulven is currently in a number of Phase II trials testing its antitumor effect in ovarian, pancreatic and prostate cancer. The company intends to initiate a Phase III pivotal program for Irofulven by the end of this year.

The company is under an SEC-imposed quiet period and was unavailable for comment.