PARS. Pharmos: $7m. placement clears way for trials (I have no present position in PARS nor is this a recommendation, just an observation)
Jerusalem Post. TEL AVIV (February 14) - Pharmos Corp. a US-Israeli company, finally has enough cash in the bank to begin final clinical trials of a brain-trauma treatment, its chief executive officer told The Jerusalem Post yesterday. The news of the fundraising, announced late on Thursday, sent Pharmos's share price soared 29 percent to a $4.03 yesterday, amid the heaviest day of trading ever for the company with some 4.6 million shares changing hands.
An industry observer said he expects the company, which now has a market capitalization of $178.8m., to announce a further placement of more than $2m. in the next few days.
"The rise reflects growing investor confidence in our financial situation," CEO Haim Aviv, who founded Pharmos in 1992, told the Post.
The company said it had raised a total of $7.3m. from three unidentified institutional investors. A total of three million shares were issued in a price ranging from $2.375 to $2.50 a share.
"Before the placements, our cash position was very low and stood at just $3m. Now we have a more significant sum of $10m. in the bank," Aviv said. "This is enough for us to start moving forward. Investors don't like to invest in companies that don't have sufficient cash, it's too speculative a risk for them. They need more financial stability."
With the proceeds from the placement, Aviv said, the company plans to start Phase III clinical trials of its new brain-trauma drug candidate, dexanabinol, in the summer. These trials are set to last between 24 and 30 months. Phase III trials are the last stages required before a drug can get final approval by the US Food and Drug Administration.
"The placements enable us to move ahead with our program" said Aviv. "Ten million dollars is not a huge sum of money but it is enough for us to take the next step. Investors have been waiting for this to happen."
Aviv said he believes that the share increase also comes as a result of growing awareness about the company. "The real potential of the company has become more widely recognized," he said.
Another boost for the company, he said, came on Friday when broker SmallCaps Online LLC reiterated its "buy" recommendation for Pharmos and set a 12-month price target of $7 to $9 a share.
Robert W. Cook, Pharmos's chief financial officer, indicated that market interest in the company has been building for some weeks.
"Over the past several weeks, interest in Pharmos has increased and we were able to take advantage of this favorable climate by raising a significant amount of funds quickly and efficiently, avoiding the need to use complicated financial structures or to issue warrants," Cook said in a statement. |
