By Lisa Seachrist

Washington Editor

WASHINGTON — Emisphere Technologies Inc., which specializes in oral delivery of large molecules, raised $13.5 million in a private placement of senior convertible notes.

The proceeds from the placement will be used to fund the clinical testing of the Hawthorne, N.Y.-based company's lead drug product, oral heparin, soon to enter Phase II trials for the prevention of deep vein thrombosis, said Lewis Bender, senior vice president of business development for Emisphere.

"This placement puts us in an excellent cash position with approximately four or five years of cash based on our current burn rate," Bender said. "This should see us into profitability."

The placement is being handled by Diaz & Altshcul Capital LLC, of New York, and involves several unnamed institutional investors.

The placement is a convertible debt investment in the form of 5 percent senior convertible notes. Notes may be converted into common stock in the company over the next three years.

The conversion price of the notes has an undisclosed floor to prevent dilution of the company's stock and a ceiling limiting profits that the investors may realize.

Investors will receive 5 percent interest in the form of cash or stock each year for notes outstanding. Under certain market conditions, the company can force conversions.

Emisphere raised the money largely to cover the clinical trial costs associated with a 50-50 oral heparin joint venture with Elan Corp. of Dublin, Ireland.

Heparin is an anticoagulant used for the prevention of deep vein thrombosis in patients who are at risk for developing blood clots in their veins such as those undergoing hip replacement. Currently, patients may take either oral warfarin or injectable heparin.

Although warfarin is effective, patients using it require constant monitoring and must contend with poor drug interaction and side-effect profile. Patients on heparin suffer fewer side effects, but must inject themselves up to three times a day.

Heparin's Benefits Without Injections

Emisphere's oral version of the drug allows patients to enjoy the benefits of heparin over warfarin without the need for injections.

The Phase II study will begin this quarter, Bender said. "We are also looking for a marketing partner as neither Emisphere nor Elan has the sales staff needed for a cardiovascular drug," he added.

Emisphere has two other big pharmaceutical deals. The company inked a $35 million deal last December with Novartis Pharma AG, of Basel, Switzerland, to develop oral formulations of two undisclosed large molecule compounds. In February 1997, Emisphere entered into a $60 million deal with Eli Lilly and Co., of Indianapolis, to develop oral forms of two endocrine proteins.

In experiments with animals, Emisphere has used its oral carriers to deliver insulin, human growth hormone, calcitonin, human parathyroid hormone, cromolyn and deferoximine.

The company estimates worldwide sales of the injectable formulations of these compounds, along with heparin, at more than $5 billion.

Emisphere's shares (NASDAQ:EMIS) closed Monday at $16.69 up $0.19. *