By Debbie Strickland

NeXstar Pharmaceuticals Inc. is raising $75 million — the two-year-old company's largest financing — to repay $28.6 million in bank debt, license new products and provide for general corporate purposes. The private placement financing, slated to close on or about July 31, consists of convertible subordinated debentures carrying an interest rate of 6.25 percent.

Due 2004, the debentures are convertible into common stock at a price of $16.875 per share.

"Effectively, this targets a completely new class of investors," said Michael Hart, vice president and chief financial officer of the Boulder, Colo., company. "Biotech common stock investors are more risk-oriented, while debenture investors are less risk-oriented as a group."

NeXstar disclosed neither the financial institution behind the deal nor the investors.

Created in 1995 when NeXagen Inc., of Boulder, merged with Vestar Inc., of San Dimas, Calif., the company withdrew a mid-1996 public offering that would have raised about $60 million. (See BioWorld Today, June 26, 1996, p. 1.) The company did raise $25 million in a 1996 private placement transaction.

NeXstar's shares (NASDAQ:NXTR) closed Tuesday at $12.50, down $1.

The company ended the second quarter June 30 with $33.1 million in cash, cash equivalents and marketable securities, and reported a net loss of $8.3 million on revenues of $23.2 million.

The financing appears keyed to good news: Product sales jumped 8 percent in the quarter and the company earlier this month won an FDA advisory committee recommendation for approval of AmBisome, a liposomal formulation of amphotericin B used mainly to treat life-threatening fungal infections in immunosuppressed patients. (See BioWorld Today, July 17, 1997, p. 1.)

Already approved in 28 countries, AmBisome generates the bulk of NeXstar's revenues.

The company also markets DaunoXome, a liposomal formulation of the anticancer agent daunorubicin, as a primary therapy for Kaposi's sarcoma in the U.S., Canada and 16 European countries.

The new financing will allow the company to seek a new, in-licensed product for its line-up.

"Our preference would be for something already approved, perhaps selling something that fills a small niche," Hart said.

He stressed, though, "We have to have a strong pipeline."

With AmBisome apparently headed for FDA approval, the company is preparing to launch a Phase II trial of MiKasome, a liposomal formulation of amikacin for the treatment of bacterial infections. NeXstar also expects to file an investigational new drug application for its vascular endothelial growth factor (VEGF) antagonist in 1998.

The VEGF antagonist is the first potential therapeutic to come out of the company's oligonucleotide-centered combinatorial chemistry program.

In a related move, the company is relocating to a 9,800-square-foot scaled-up production facility for its new manufacturing technology called Product Anchored Sequential Synthesis (PASS). PASS is a new method for synthesizing oligonucleotides and is "critical for the success" of the company's aptamer antagonistic development program (which includes the VEGF antagonist), according to Patrick Muhaffy, president and CEO. *