By Mary Welch

Hemosol Inc. raised $27.57 million (C$40 million) by selling 4.8 million common shares of stock at $5.76 each (C$8.35), money that will be used to move its lead product, Hemolink, through Phase III trials and into commercialization.

The Toronto-based company grossed $27.57 million before an option to the underwriters that will increase the issue to 5.52 million shares and total proceeds of $31.71 million (C$46.1 million). After the deal the company will have about 30 million shares outstanding.

¿We raised a little more than we were looking for, which was about C$30 million to C$35 million,¿ said John Kennedy, Hemosol¿s president and CEO. ¿The overallotment was sold. It generated a lot of interest. Money is going to biotech again. We did a small offering last year and it was much harder to do. It took us several months and a lot of hard work. This year we were able to attract a lot of new big names.¿

Last April, the company raised $C11 million in a private placement.

A syndicate of underwriters was involved in the new financing, including Yorktown Securities Inc., of Toronto, which includes HSBC Securities (Canada) Inc.; Loewen, Ondaatje, McCutcheon Ltd.; Nesbitt Burns Inc.; and National Bank Financial Inc., all of Toronto. Other underwriters were TD Securities Inc., of Toronto; Canaccord Capital Corp., of Vancouver, British Columbia; and Northern Securities Inc., of Toronto.

Hemosol, which went public in Canada in 1993, has two Phase III trials of Hemolink under way in the U.S., the UK and Canada. Hemolink, a human hemoglobin-based blood substitute, is the company¿s lead oxygen carrier product.

The trial that is taking place in the UK and Canada will be completed this quarter, with the U.S. trial slated to end by the end of the year. The company expects to file for marketing authorization in the UK and Canada in the second quarter and launch the product in 2001, he said.

¿The U.S. trials are about six month behind the international studies,¿ Kennedy said.

The international trial involved about 300 patients undergoing coronary artery bypass grafting surgery. About 600 patients will be enrolled in the U.S.

The trial is taking place in conjunction with a blood conservation strategy known as intraperative autologous donation. In this procedure, up to four units of blood are removed from a patient just prior to undergoing cardiopulmonary bypass. The harvested blood is replaced with Hemolink instead of standard volume expanders that do not deliver oxygen. The patient¿s harvested blood will be returned as needed, along with blood recovered by cell-salvage techniques.

One of the endpoints of the trial will be to show Hemolink will significantly reduce or eliminate exposure to banked blood from an unknown donor, Kennedy said.

The potential benefits of Hemolink are many, Kennedy said. Among them are improved assurance of patient safety from viral or bacteria infections; universal compatibility with all blood types, which avoids the potentially serious consequences of mismatched blood; and fewer allergic and other adverse reactions, he said.

In addition, Hemolink, with an extended shelf life of up to one year ¿ compared to 42 days for blood ¿ could also bring about more efficient management of blood supplies, he said.

Hemosol sold Hemolink rights in Europe (except the Netherlands) to Fresenius AG, of Bad Homburg, Germany, in a deal worth up to C$39 million. However, in September the companies cut their ties and Hemolink was returned to Hemosol.

¿They just didn¿t want to start the trials,¿ Kennedy said. ¿It was a non-cash transaction and we got our rights back. We are in discussions with other companies now.¿

Hemosol¿s stock (TSE:HML) closed Friday at C$14.00, up C$3.45.