By Mary Welch

CuraGen Corp. intends to raise $100 million through the sale of convertible subordinated debentures, the proceeds of which will be used to fund the company's internal discovery and development programs.

"We understand that this offering will be well received," said David Wurzer, the company's executive vice president and chief financial officer. "It seems to be a very good market now. The price has not been fixed yet, but it'll be at an 18 to 22 percent premium, which will not be all that dilutive to the company. We don't want to have a substantial dilution of stock and, if we have to sell stock, we want to get the maximum price for it."

In addition, the New Haven, Conn.-based company will offer the underwriters an additional $20 million overallotment option. The underwriters are Dain Rauscher Wessels, of Minneapolis, and Lehman Brothers and Morgan Stanley Dean Witter, both of New York.

Prior to the sale, which should close at the end of this week, the company had 17.4 million shares outstanding.

CuraGen has four years of operating cash and the new financial infusion will "put us in an excellent financial position," Wurzer said. As of Dec. 31, the company stated it had cash resources of $86 million.

In September, the company raised $15 million in a private placement to expand its functional genomics technologies and databases, as well as its drug discovery programs. (See BioWorld Today, Sept. 9, 1999, p. 1.)

It has two gene discovery technologies, SeqCalling and GeneCalling. SeqCalling is a generation of sequence databases and full-length clones of almost all expressed genes in any species, including low-abundance genes and cSNPs, the company said. GeneCalling produces fully annotated databases that are integrated with GeneCalling and PathCalling, a pathway and target discovery technology.

"Our scientific work is being very well received," he said. "We have about 300 people, half working on our collaborative projects, the other half on internal programs. This sale of convertible notes will help us expand our internal research and development departments. We have nothing in the clinic now, but getting something into the clinic by the end of the year is one of our goals."

Separately, the company released its fourth-quarter and 1999 year-end financial statements showing revenues increased 63 percent to $15.1 million, compared with $9.2 million for 1998. For the quarter, the company's revenues were $4.8 million, compared to $2.2 million for 1998's fourth quarter, an increase of 113 percent.

CuraGen's stock (NASDAQ:CRGN) closed Friday at $105.50, down $11.125.