Oscient Pharma $75 million convertible talked at 3.5%-4.0%, up 30%-35%

By Ronda Fears

Nashville, May 3 - Oscient Pharmaceuticals Corp. launched $75 million of seven-year convertible notes talked to yield 3.5% to 4.0% with a 30% to 35% initial conversion premium.

J.P. Morgan Securities and Merrill Lynch & Co. are joint bookrunners of the Rule 144A deal, which is scheduled to price after the close Tuesday.

The senior notes will be non-callable for six years, and coupon payments for the first three years will be collateralized with Treasuries.

Holders will have full dividend protection via a conversion ratio adjustment.

There is a $25 million greenshoe available.

After purchasing the Treasuries, proceeds are earmarked to support the launch of Oscient's drug, Factive tablets, this summer, to accelerate development for the tablets and an intravenous form of that drug and Ramoplanin, to pursue additional in-licensing opportunities and for general corporate purposes.

Waltham, Mass.-based Oscient concentrates its efforts in two principal areas - infectious diseases caused by bacterial and fungal pathogens and human diseases with a significant genetic component.

The company has nine established product development programs. Its lead product, Ramoplanin, is in a phase three clinical trial for the prevention of bloodstream infections and a phase two trial for the treatment of diarrhea. The company has seven product alliances with partners such as Amgen, AstraZeneca, Schering-Plough and Wyeth.

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