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HEARD ON THE BEAT / ORANGE COUNTY

Techniclone Financing

April 27, 1998|BARBARA MARSH | TIMES STAFF WRITER

Techniclone Corp.--the tiny Tustin biotech company stung last year by a potentially ruinous stock financing technique--hopes to pull itself out of the financial muck.

The company last week lined up $1.8 million in new commitments for temporary financing to tide it through its short-term operating needs. The company has received $1.1 million in new equity and debt financing.

Separately, at a meeting last week, Techniclone shareholders approved a doubling of the company's authorized shares to 120 million. The increase, which further dilutes the value of the company's stock, was required under terms of the troublesome preferred stock offering it made a year ago.

Thomas R. Testman, a consultant temporarily serving as the company's chief executive, said the recent financing steps have allowed the company to shift its focus to securing longer-term financing.

Techniclone is trying to unwind the financial mess that followed its $12-million sale of convertible preferred stock early last spring. The capital-hungry company needed the money to fund research for its experimental cancer treatments.

The stock deal was structured to encourage investors to postpone converting to common stock by setting up a scale that made it more lucrative for investors who waited longer to convert. Trouble was, the company's stock declined drastically, falling from $5 to $3 by last September. The owners of the convertible shares began converting, diluting the value of the common shares.

The stock plummeted further, reaching its lowest close at 48 cents a share on Feb. 18 before recovering slightly. The stock closed Friday at 69 cents, off 6 cents for the day.

Barbara Marsh covers health care for The Times. She can be reached at (714) 966-7762 and at barbara.marsh@latimes.com.

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