By Karen Pihl-Carey

Nexell Therapeutics Inc. raised $63 million in a private placement, more than half of which will go toward the retirement of convertible subordinated debentures held by Baxter International Inc.

The institutional investors, including Boston-based John Hancock Mutual Life Insurance Co., New York-based Metropolitan Life Insurance Co. and Springfield, Mass.-based Massachusetts Mutual Life Insurance Co., purchased put rights and warrants, as well as 63,000 shares of Series B preferred stock, which is convertible into common stock at $2.75 per share, a premium to the current stock price.

Nexell's stock (NASDAQ:NEXL) closed Monday at $1.562, up 18.75 cents.

"These are brand new investors to the company, almost a who's who of major insurance companies," Nexell President L. William McIntosh told BioWorld Today. "We're particularly pleased that these investors, who are obviously quite sophisticated, have taken a major stake in the company, because we believe it is a major vote of confidence for us. We think this group understands that we have the assets and the opportunity to become really a leading, if not the leading, player in cellular therapies."

The financing gives investors one put right per share of preferred stock granted by Baxter. The preferred stock carries an annual cash dividend of 3 percent, and investors may put their preferred stock to Baxter for return of their money with interest between Nov. 24, 2002, and Nov. 24, 2004.

The warrants are exercisable for 3 million shares of common stock at $3 per share for five years and include a class of performance warrants that become exercisable after five years at 1 cent per share. The number of performance warrants are dependent on the company's closing price when they are exercised. If the price is above $5 per share, none may be exercised, but if it is at or below $3 per share, up to 6 million shares may be exercised.

Lehman Brothers, of New York, acted as placement agent for the transaction.

Part of the financing will go toward the $34 million in convertible subordinated debentures held by Baxter.

The remaining funds "will be used for general corporate purposes, to include research and development, clinical, regulatory, as well as sales and marketing efforts," McIntosh said.

Nexell, of Irvine, Calif., was formed by Wilmington, Del.-based Vimrx Pharmaceuticals Co. and Baxter, the principal operating subsidiary of Baxter International Inc., of Deerfield, Ill. Early this year, Vimrx acquired Baxter's interest in the venture and merged all its operations into Nexell. (See BioWorld Today, Jan. 19, 1999, p. 1.)

In July, Nexell received marketing clearance from the FDA to begin selling its stem cell selection systems, Isolex 300 and the fully automated Isolex 300i. (See BioWorld Today, July 7, 1999, p. 1.)

As of the third quarter ended Sept. 30, Nexell has cash and short-term investments of $18.2 million and 72.7 million outstanding shares. The company posted a net loss for the quarter of $12.97 million, or 8 cents per share.