SuperGen Inc. raised $21.25 million after completing a private placement of senior convertible notes in a deal similar to an offering struck four months ago.

"We've upgraded the old one, cleaned it up a little bit, and also moved the share price up," SuperGen Chairman and CEO Joseph Rubinfeld told BioWorld Today. "It's like restructuring your mortgage - when you see a better interest rate, you refinance."

The notes, which mature Dec. 31, 2004, bear interest at an annual 4 percent rate. The Dublin, Calif.-based company retained the option to pay the interest in cash or common shares, subject to certain conditions. The notes, sold to a group of existing institutional investors, are convertible at the investors' option at any time into SuperGen common stock at a fixed conversion price of not less than $6 or more than $8. Its shares (NASDAQ:SUPG) closed down 15 cents Wednesday at $5.36.

"Frankly, there was a window of opportunity over the last few weeks in which a lot of biotechs jumped through this convertible note type of arrangement," Rubinfeld said. "We had the opportunity, and we grabbed it."

He added that the latest funding provides SuperGen a comfortable cash position through the end of next year.

The company, which did not issue warrants to purchase its common shares in the placement, said it would repay the principal amount of the notes in four quarterly installments, beginning nine months after closing, in any combination of cash or common shares. But SuperGen did issue warrants for the purchase of about 2.6 million common shares of AVI BioPharma Inc. owned by SuperGen. The option would cost investors $5 apiece over the next three and a half years, and if exercised, SuperGen could gain up to $13.17 million in additional funding.

New York-based Rodman & Renshaw Inc. acted as SuperGen's exclusive placement agent.

In its last offering, the 4 percent senior convertible notes were convertible into common stock at $4.25 apiece. SuperGen could have paid them off in cash, its shares or stock in AVI. (See BioWorld Today, Feb. 28, 2003.)

In addition, noteholders from the last offering converted half of their notes in the principal amount of about $10.6 million, plus accrued and unpaid interest, into SuperGen common shares at a fixed conversion price of $4.25 apiece.

"Besides the $21 million we got directly, we have the ability to use $13 million from a sale of AVI stock and they also brought down $10 million of the old debt," Rubinfeld said. "So net-net, we did $44 million in this deal, even though it doesn't look like it on the surface."

The conversion caused the remaining $10.6 million principal amount of the outstanding notes to have a final maturity date of Feb. 26, 2004. And the remaining notes were amended, removing the holders' option to exchange them into AVI shares and SuperGen's ability to use such shares valued at market at the time of repayment to repay outstanding principal. Its ownership stake in Portland, Ore.-based AVI stems from a deal in which SuperGen licensed U.S. marketing rights to Avicine. AVI plans to push the cancer vaccine into a pivotal Phase III trial in pancreatic cancer patients in the fourth quarter. (See BioWorld Today, April 6, 2000.)

Rubinfeld said SuperGen is working toward completing new drug applications for two cancer products - Orathecin (rubitecan) and Dacogen (decitabine).

Orathecin is in the latter stages of a rolling, fast-track application in the U.S. for resistant or refractory pancreatic cancer. Enrollment has been completed in a Phase III trial of Dacogen for advanced myelodysplastic syndrome. The injectable drug also is in a Phase II study in patients with chronic myelogenous leukemia.

"Without anything new happening in the company, this is enough money, though obviously if we get approval some of it would go toward marketing our products," he said. "At the same time, we have been approached by many strategic partners, and if a good enough deal comes along we can take it. But we're not forced to take any deal in order to get the products to market."

The company also is expanding Phase IV studies of Nipent, an anticancer product already approved for hairy-cell leukemia. Rubinfeld said the added funding also would allow room in the budget to continue work on an anti-angiogenesis product as well as oral and inhaled versions of anticancer drugs.