By Lisa Seachrist

Washington Editor

Having announced two major deals for its inhaled drug delivery technology in the past week, Alkermes Inc. said it is offering $150 million worth of convertible subordinated notes due in 2007.

The Cambridge, Mass., company will also make available an option to purchase up to $50 million of additional notes through initial purchasers to qualified institutional buyers. The notes would be convertible into Alkermes' common stock at the option of the holder at a price yet to be determined.

The company expects to complete the offering this month and will use the proceeds to fund research, development and clinical trials as well as for manufacturing facilities and equipment. Most of Alkermes' drug-delivery collaborations includes provisions for Alkermes to manufacture any new products.

The company is bound by an SEC quiet period and was unavailable for comment.

Alkermes currently has 25.4 million shares outstanding. Until the convert price is determined, the number of shares associated with this offering can't be determined.

Alkermes' stock (NASDAQ:ALKS) closed Wednesday at $107.25, down $3.75. The stock has seen an incredible run this year, moving from its 52-week market low of $21.625 in March 1999 to its current valuation.

Recent collaborations with Glaxo Wellcome plc, of London, and Eli Lilly & Co., of Indianapolis, helped fuel the stock's recent rise. Alkermes' stock closed Feb. 2, prior to those deals, at $75.625. (See BioWorld Today, Feb. 4, 2000, p.1; and Feb. 9, 2000, p. 1.)

Supporting the collaborations is a number of novel drug delivery technologies. The Glaxo and Lilly collaborations are based on the company's AIR technology. The technology uses large, low-density particles and simple inhaler devices to deliver drugs deep into the lungs with high efficiency. The Glaxo deal will focus on using the technology in order to develop therapies for the treatment of respiratory ailments. In other words, the companies are using the technology to directly deliver the drug to the location of action. With the Lilly deal, the companies are working to deliver recombinant human growth hormone to the bloodstream via the lungs.

Alkermes has some experience working with recombinant human growth hormone. Its collaboration with Genentech Inc., of South San Francisco, to develop a sustained-release injectable form of human growth hormone recently resulted in FDA approval of Nutropin Depot, a once-a-month or twice-a-week injection to treat children with growth hormone deficiency. The company used its ProLease technology in that collaboration. ProLease is a microsphere-based technology to allow sustained delivery of complex and fragile biomolecules. The company also has a collaboration with Johnson & Johnson subsidiary Ortho Biotech Inc., of Raritan, N.J., to develop a ProLease formulation of erythropoeitin.

In addition to ProLease, Alkermes has a microsphere technology called Medisorb to deliver small molecules and peptides in a sustained manner. The company has a collaboration with Janssen Pharmaceutica, a Beerse, Belgium, subsidiary of Johnson & Johnson, to develop a sustained-release, injectable form of the anti-psychotic medicine Risperdal using Medisorb technology. That form of the drug is in Phase III studies.

In addition to the AIR, ProLease and Medisorb technologies, Alkermes has oral delivery systems called RingCap and DST, and a technology called Cereport to deliver drugs across the blood-brain barrier.