By Mary Welch

Alexion Pharmaceuticals Inc. intends to sell 2.5 million shares of stock in order to fund clinical and manufacturing development of 5G1.1, which is in Phase II trials for the chronic treatment of rheumatoid arthritis and membranous nephritis.

If the stock were to sell at Wednesday's opening price of $14.745, the New Haven, Conn.-based company would raise about $36.9 million. Alexion's stock (NASDAQ:ALXN) closed Wednesday at $14, down 75 cents.

Leonard Bell, Alexion's president and CEO, citing the SEC's "quiet period" rule, had no comment on the offering.

In addition to funding 5G1.1, the money will be used for preclinical research, drug discovery programs and clinical and manufacturing development for the company's other programs.

"It's clear that some of the proceeds will be used for 5G1.1, which is unpartnered, as well as for their manufacturing requirements in the year 2000," said Akhtar Samad, senior vice president of Oscar Gruss & Son Inc. in New York. "We don't know more details but we like Alexion's story. They are the dominant player in complement-based diseases, a subject poorly understood by the Street. There are a number of applications in inflammatory diseases and acute cardiovascular applications where complement-based drugs can play a large role."

US Bancorp Piper Jaffray, of Minneapolis, will serve as the lead managing underwriter, with Hambrecht & Quist LLC, of New York, acting as co-managing underwriter.

5G1.1 is a fully humanized monoclonal antibody specifically designed to deliver potent anti-complement and anti-inflammatory activity to patients with chronic inflammatory diseases.

It, along with 5G1.1-SC, are part of Alexion's C5 inhibitors that are designed to intervene at the midpoint of the complement cascade. The C5 inhibitors are designed to step in at an optimal point to preserve the normal disease-preventing functions of complement proteins while inhibiting the disease-causing actions.

5G1.1-SC is a bacterially produced, humanized single-chain antibody. The compound is in Phase II trials for the treatment of acute inflammation caused by cardiopulmonary bypass surgery and is partnered with Cincinnati-based Procter & Gamble Pharmaceuticals.

The company's results for fiscal 1999, which ended July 31, showed contract research revenues of $18.7 million, compared to $5 million for the same period last year. The net loss for the fiscal year decreased to $6.4 million from $7.87 million for the same time last year. Cash and cash equivalents amounted to $28.3 million.

Alexion has about 11.2 million shares outstanding.