Somatogen Inc. on Tuesday announced that it has completed aprivate placement with foreign investors and a follow-onpublic offering, raising a total of about $44 million.

Lehman Brothers acted as adviser to the Boulder, Colo.,company for the private placement of about 2 million shares ofcommon stock at $8.25 per share, which raised about $16million.

In the follow-on public offering, Somatogen raised about $28million from the sale of 3 million shares of common stock, at$9.75 a share, directly to institutional investors. Stover HaleyBurns Inc. and Montgomery Securities Inc. assisted thecompany in identifying prospective buyers.

When the revised offerings were announced on Oct. 25,Somatogen's stock (NASDAQ:SMTG) was at $10.25 a share; onTuesday it was down 38 cents a share, closing at $12.88.

Following the transactions, the company said it has about 15.3million shares outstanding.

Somatogen also announced Tuesday that it is cutting its workforce to 195 people by eliminating 24 positions, with about 80percent of the eliminated jobs in administrative and supportareas. The layoffs will have a fairly sizable impact on thecompany's burn rate, Nanita Woolhiser, Somatogen'sadministrator of investor relations, told BioWorld.

At the end of its first fiscal quarter on Sept. 30, Somatogenreported cash, cash equivalents and short-term investments ofabout $13.6 million, compared with about $22.7 million a yearago, and a net loss of about $5.7 million, or 55 cents a share,compared with a loss of about $5.2 million, or 56 cents a share,in the prior-year period.

Somatogen filed an S3 statement with the Securities andExchange Commission in late July that called for the companyto raise $40 million from the sale of convertible, exchangeablepreferred stock, to be underwritten by Lehman Brothers andMontgomery Securities.

The company restructured the offering in late October,announcing that it would sell common stock rather thanpreferred shares, and it added the offshore private placement.Somatogen also dispensed with the underwriters but retainedStover Haley Burns and Montgomery Securities as "finders."

Woolhiser said proceeds from the offerings would be used tocontinue development of the company's recombinant form ofhuman hemoglobin, rHb1.1, currently in Phase I/II trials.

-- Chuck Lenatti Managing Editor

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