Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Neurobiological Tech (NTII) -- Ignore unavailable to you. Want to Upgrade?

To: Apache Indian who wrote (589)	6/15/1999 9:19:00 AM
From: Dr. John M. de Castro	Read Replies (1) \| Respond to of 1494

I talked to Paul Freiman on Monday. The clinical progress is excellent. The AIDS Dementia trial is now fully enrolled. The diabetic Neuropathy trial is going great guns and has enrolled 350 of the 400 required. Finally, the Merz European trials are completed and the US memantine trial is 80% enrolled. There should be an exciting flow of clinical data on memantine starting in August and continuing throughout the rest of the year. There is no doubt that by years end we will know whether memantine is a useful drug for some indications or a blockbuster drug addressing huge underserviced markets. It looks like the partnership will be delayed. They had a solid offer on the table but Merz turned it down. They're still negotiating with two companies. But, Merz appears to hold the cards. The deal is $50MM up-front and milestones and that appears to be acceptable. The bone of contention is how much is up-front and how much is milestones. Although there is not an acceptable deal at the moment, things could change rapidly. IMHO a $50 million deal is great for memantine prior to the release of the trial results and is better than I was expecting. Of course that depends on the royalty rate which wasn't disclosed. But, still that is quite an endorsement for memantine. It is only a matter of time till the right deal is cut and the more time that passes and the more trial results that are presented the better the deal will get. Paul indicated that Merz has completed its 2 European memantine trials and will have the data analyzed and announced in August. The good news is that we may see a significant announcement in August that could move the stock. The bad news is that Merz doesn't appear to be in a great rush to ink a deal as they see themselves in a stronger bargaining position in a couple of months. In the long run this will probably be a very good thing for both Merz and NTII. However, on the short run, it presents a financing problem for NTII. In terms of financing, there are two things going on. First there is a private placement being coordinated through a SF investment bank. The second is a loan from Merz. Paul was clear that Merz would would front him the money if other financing arrangements didn't work out. He saw Merz as a reliable safety net. He felt that he needed $1.4MM to complete the diabetic neuropathy trial and would like to raise $2MM. The private placement terms are $.80 per share with two $.75 5-yr warrants for every 5 shares. The lock-up is one year. They are looking for $25K+ chunks, but will take investments of $5K and up. If anyone is interested in participating call NTII and they will send out the relevant materials. All in all, I am very encouraged. The clinical progress has been extraordinarily rapid. Fast and easy patient accrual is always a good sign in a clinical trial. It signals that there is a large patient population the does not have adequate treatment and are eager to find one. Also the fact that patient enrollment has not slowed but accelerated suggests that the physicians participating in the clinical trials are seeing something going on that encourages them. Paul has expressed that the anecdotal evidence and feedback from the trial sites has been encouraging and the rapid patient accrual reinforces that notion. Although the partnership delay presents a bump in the road for NTII. I am confident that Paul will continue to find the small amounts of money needed to keep going. In fact, the delay may be a very good thing. When the trial data rolls in, assuming it is positive, the deal can only get sweeter and sweeter. John de C