Encysive Pharma $100 million convertible talked to yield 2.25%-2.75%, up 30%-35%

By Ronda Fears

Nashville, March 9 - Encysive Pharmaceuticals Inc. launched $100 million of seven-year convertible notes talked with a coupon of 2.25% to 2.75% and an initial conversion premium of 30% to 35%.

UBS Investment Bank and JPMorgan Securities are joint bookrunners of the Rule 144A deal, which is slated to price after the market close Thursday.

The senior notes will be non-callable for five years, then with a 120% hurdle through maturity.

Full dividend and takeover protection are provided.

There is a $10 million greenshoe available.

Houston-based Encysive said it intends to use proceeds to fund further clinical development, marketing and pre-launch activities related to Thelin and for further research and development of other product candidates, as well as for general corporate purposes, including capital expenditures and working capital.

In addition to Thelin, an endothelin receptor antagonist in Phase III clinical trials as a treatment for pulmonary arterial hypertension, Encysive has other clinical product candidates in earlier stages of development for a range of cardiovascular and inflammatory diseases, including the selectin antagonist bimosiamose in asthma, psoriasis and atopic dermatitis. The company also receives royalties on sales of Argatroban, its first FDA-approved product, which is being marketed by GlaxoSmithKline for heparin-induced thrombocytopenia.

For 2004, Encysive reported a net loss of $54.7 million, or $1.01 per diluted share, compared with a net loss of $35.3 million, or $0.80 per diluted share, for 2003. Revenues grew to $13.8 million from $11.6 million in 2003.

For fourth quarter, the company reported a net loss of $14.7 million, or $0.26 per diluted share, versus a net loss of $8.7 million, or $0.19 per diluted share, for fourth quarter 2003. Revenues rose to $5.0 million from $2.7 million in the period a year earlier.

Total R&D expenses in 2004, the company said, increased to $58.2 million from $31.8 million in 2003, chiefly due to the Thelin program. Cash, cash equivalents and investments at Dec. 31 totaled $69.1 million, including $35.6 million in net proceeds from a public stock offering in September, compared to $85.5 million at Dec. 31, 2003.

Encysive shares closed Wednesday up 21 cents, or 2.14%, at $10.04.

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