By Mary Welch

Human Genome Sciences Inc. continued its pursuit of financing as the Rockville, Md., company proposed a private offering of $300 million of convertible subordinated notes due 2007, its fourth such offering since June.

When this new note offering closes later this week, and assuming the overallotment option, the company will have raised $900 million since June. So far this year, HGS has raised $225 million through a third offering of convertible subordinated notes. Last year it raised $325 million through two convertible note offerings.

HGS, as of Dec. 31, had cash totaling $466.2 million compared with $188.5 million as of Dec. 31, 1998. The increase is the $325 million that came from the two convertible notes offerings completed last year

Credit Suisse First Boston, of New York, has purchased all the notes in all of the offerings.

In January, HGS converted its first offering, issued in June and July, into common stock as all but one note holder (95 percent) converted. That tender offer paved the way for a second convertible offering of $150 million, plus $50 million in an overallotment option, that was successfully completed in December. Together, those two offerings raised $325 million.

Shortly after the initial offering was converted into common stock, HGS proposed another private offering of $150 million in convertible subordinated notes due 2007. That offering, which closed Feb. 1, was increased by $75 million to a total of $225 million principal amount of notes.

On Feb. 2, HGS called its $200 million aggregate principal amount of 5 percent convertible subordinated notes due 2006 for redemption on March 22. Following that redemption, the company expects to have 54.3 million shares outstanding.

For the latest financial round, the notes will be convertible into common stock, at the option of the holder, at a yet-to-be-determined price. Human Genome Sciences granted the initial purchaser a 30-day right to purchase another $50 million in principle notes on the same terms and conditions.

For this offering, HGS expects to use the proceeds for a variety of purposes, including continued expansion and initiation of preclinical programs now under way; the expansion of antibody programs with Abgenix Inc., of Fremont, California, and Melbourn, UK-based Cambridge Antibody Technology Group (CAT); as well as the expansion of clinical trial programs for two novel proteins: keratinocyte growth factor-2 (KGF-2) and myeloid progenitor inhibitory factor-1 (MPIF-1).

KGF-2 is a protein designed to speed the repair of damaged mucosal tissues and to heal serious, chronic wounds to the skin. The protein just started Phase II trials for the treatment of venous ulcers. MPIF-1, a protein designed to protect blood precursor cells, is in Phase II trials for the treatment of breast and ovarian cancer.

The company has a third drug, vascular endothelial growth factor-2 (VEGF-2), in Phase I/II trials for the treatment of critical limb ischemia and for coronary artery disease. These trials are being conducted with Vascular Genetics Inc., of Research Triangle Park, N.C., in which HGS has a significant ownership interest.

Other uses will be to start preclinical and clinical trial programs to evaluate additional protein-, gene- and antibody-based drugs, expand its functional genomics program and enhance ongoing research and development efforts. Areas of new research include asthma and HIV. The company also will continue its pursuit of patent coverage for genes and proteins, including its currently filed patent applications that describe more than 7,500 newly discovered human genes.

Last week, HGS and CAT signed a deal worth about $67 million that gives HGS unlimited access to CAT¿s phage-display platform to develop and sell fully human antibodies, and diagnostics and research tools. HGS also signed a deal last week with Compugen Ltd., of Tel Aviv, Israel, to exploit Compugen technology that allows direct comparison of DNA sequences. (See BioWorld Today, March 2, 2000, p. 1; and March 3, 2000, p. 1.)

HGS¿ stock (NASDAQ:HGSI) closed Monday at $197.687, down $18.312.