By Mary Welch

Human Genome Sciences Inc. plans to raise $150 million through a private offering of convertible subordinated notes in order to continue the expansion and initiation of the Rockville, Md., company's preclinical and clinical programs, as well as its research efforts.

Human Genome Sciences (HGS) also will file an exchange offer under which holders of its existing 5.5 percent convertible subordinated notes, due 2006, will receive an additional $180 per $1,000 principal amount of notes payable in HGS common stock to convert their notes into common stock during the period of the exchange offer. This stock is in addition to the 19.157 shares issuable to note holders for each $1,000 principal amount of notes converted. The existing notes were issued in July and are convertible into HGS common stock for $52.20 per share.

The new notes will be convertible into common stock, at the holder's option, at a yet-to-be-determined price. The offering should be completed this month.

HGS officials were on a three-day "road show" and unavailable for comment.

Part of the money will be used to continue the expansion and start of several preclinical programs, including the expansion of antibody programs with Abgenix Inc., of Fremont, Calif., and Cambridge Antibody Technology Group plc, of Cambridgeshire, UK. Two clinical programs for novel proteins, keratinocyte growth factor-2 and myeloid progenitor inhibitory factor-1, will be augmented.

The company also expects the cash infusion will aid in the start of preclinical and clinical programs to evaluate additional protein-, gene- and antibody-based drugs, as well as expand its functional genomics program.

In addition, HGS will use the money to pursue its patent coverage for genes and proteins, including its currently filed patent applications that describe more than 7,400 recently discovered genes, as well as to expand the company's new process development and manufacturing facility.

Human Genome Sciences' stock (NASDAQ:HGSI) closed Monday at $123.625, down $5.687.