Pharmos Raises $11 Million in Private Transaction; Increased Cash Position to be Used to Accelerate R&D Programs
ISELIN, N.J., Sept. 6 /PRNewswire/ -- Pharmos Corporation (Nasdaq: PARS; Easdaq: PHRM) announced today it has raised $11 million in a private transaction with a group of investors, including a prominent investment firm with more than $1 billion in assets under management. In exchange, Pharmos issued $8 million in Convertible Debentures due February 28, 2002, and $3 million in common equity, plus warrants exercisable into common stock. Proceeds from the transaction will be used to fund Pharmos' research and development activities, in particular, to complete the development of dexanabinol for traumatic brain injury (TBI), to commence clinical trials of dexanabinol for stroke and to accelerate the Company's development of its dexanabinol analog program for central nervous system (CNS) and other inflammation-related indications.
The Convertible Debentures are convertible into common stock of the Company at a fixed price equal to 105% of an average market price during a period before and after closing. The common stock is being issued at 100% of the market price as determined during the same period, subject to a possible one-time adjustment based on average pricing during a 30-day period within the first 90 days following registration of the shares. Common stock investors also have the right, exercisable for 12 months, to purchase up to $2 million in additional common shares using a similar formula if the market price of the Company's common stock at the time of exercise exceeds the average market price at initial closing. $4 million in proceeds is being held in escrow and will be released as the Debentures are converted into common stock or repaid at maturity. Ladenburg, Thalmann, & Co. Inc. acted as private placement agent in the transaction.
``As a result of this transaction, Pharmos will be able to ramp up its R&D activities well beyond the current TBI and stroke programs,'' said Haim Aviv, Ph.D., Chairman and CEO. ``I believe that the expansion of our product pipeline into other areas of neurology and inflammation will add significant value to the business of Pharmos.''
Dexanabinol is the leading neuroprotective and anti-inflammatory compound in Pharmos' CNS program. As previously announced, the Company is preparing to commence an international pivotal trial of dexanabinol with several hundred TBI patients this year. |
