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Biotech / Medical : Neurobiological Tech (NTII)

NTII 0.00

Dec 18 4:00 PM EST

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To: John Dwyer who wrote (332)	4/20/1998 9:56:00 AM
From: Biomaven	Read Replies (1) of 1494

John, Here's my reading of the announcement: (Hopefully there should be an 8-K filing giving more details soon.) NTII has given up all US rights to memantine in exchange for a share in Merz's revenue stream from all indications for memantine (presumably only in the US, but it didn't actually say so). My assumption is that Merz will fund/perform all future US trials for all indications. What this means is that the likelihood of eventual memantine US approval is substantially increased, particularly as Merz's European data can be incorporated into the application. Presumably Merz would not have done this deal unless their own memantine data was promising. How good a deal is this for NTII? If my interpretation is correct, I think it removes most of the financial risk from the stock. The key unknown is what the royalty rate is going to be. I would guess something like 7%, with another few percent to Children's. If memantine is a $100m drug, this is still a healthy royalty for a small company - around $1 per share. If it works in general dementia (not just Aids), then it could be a $500m drug. The above is mostly speculation. I bought some on the morning the deal was announced at just over 1. Trading was somewhat strange - I put in my order when the price was still well under 1, with a 1 1/4 limit. Lots of trades below 1 then ensued before I got a partial fill at 1 1/16 followed quite a bit later by the remainder at 1 1/32. (And I wasn't buying large amounts of shares here). With the capital infusion and the price above $1, I wonder if they will now qualify for NASDAQ again? Anyone know what all the requirements are? Peter

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