By Jim Shrine

IGEN International Inc. sidestepped the public markets like many other biotech-related companies seeking capital and raised $30 million through a private debt financing.

The sole buyer was Boston-based John Hancock Mutual Life Insurance Co. The debt carries a seven-year term with an interest rate of 8.5 percent. ING Baring Furman Selz LLC, of New York, was placement agent.

It¿s a relatively straightforward deal though it is interest-only (no principal) for the first two years, said George Migausky, IGEN¿s vice president and chief financial officer. ¿It¿s a pure debt deal ¿ no convert features, warrants or equity.¿

Migausky said there were two aspects to the financing method that made it attractive to IGEN.

¿The obvious one,¿ he said, ¿is that we are not incurring any shareholder dilution. The second relates to the security for this debt. In this case it¿s the stream of royalty payments we¿ll be receiving from Roche. Otherwise, a company losing money like we are would have trouble with any kind of debt financing.¿

IGEN, of Gaithersburg, Md., has been receiving royalties from Roche Diagnostics ¿ a division of Basel, Switzerland-based F. Hoffmann-La Roche Ltd. ¿ for the past two years from sales of Roche¿s Elecsys immunodiagnostics, which are based on IGEN¿s Origen technology.

Royalty revenues from the quarter that ended in December were $2.5 million. IGEN, in fact, has filed a lawsuit against Roche, claiming the royalty payments should be higher.

Meanwhile, IGEN plans to use some of the proceeds to help in the launch of its M-Series High Throughput Screening System, a second-generation product to the Origen Analyzer. New systems have been shipped to Pfizer Inc., of New York, and Amgen Inc., of Thousand Oaks, Calif. Eight other biopharmaceutical companies have made commitments to the system, Migausky said.

The company said the M-Series system allows for the performance of large drug-candidate screens at a high level of versatility, accuracy and sensitivity. It has utility in both drug discovery and drug development. The M-Series is based on the electrochemiluminescence module, is much smaller than the original system, and gives the ability to array multiple modules.

¿The majority of revenue generated here [with the M-Series] is from the reagents, as opposed to the capital sale,¿ Migausky said. ¿Part of our marketing approach is to offer customers a reagent rental plan,¿ under which IGEN will provide the instrument in exchange for a commitment to purchase a certain number of tests.

Internally, a major focus at IGEN is on development of products in the area of clinical point-of-care testing, for use near or at the site of a patient.

In December 1997, IGEN completed a $25 million convertible preferred financing. That came with a fixed conversion rate of $13.96 per share and a three-year no-call provision. No conversion has taken place.

For the nine months that ended Dec. 31, IGEN reported a net loss of $9.6 million on revenues of $11 million. It had $10.4 million in cash and 15.3 million shares outstanding.

The stock (NASDAQ:IGEN) closed Tuesday at $24.375, down 12.5 cents.