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NeoTherapeutics Stock Tacks on 30% Gain

February 08, 2001|From Dow Jones Newswires

NeoTherapeutics Inc.'s climbing stock moved up an additional 30% Wednesday, snapped up by investors after the company said it is planning a pivotal study of its drug compound for treating Alzheimer's disease.

The Irvine biopharmaceutical company also said this week that a subsidiary received $7 million in new financing.

The stock, which rose 15% on Tuesday and 14% on Monday, closed Wednesday at $4.16, up 97 cents a share in Nasdaq trading. A total of 1.3 million shares changed hands, up from average daily volume of 185,200 shares over the last three months.

The stock is coming off a 52-week low of $2.22 set Jan. 30. It traded as high as $27 last March.

NeoTherapeutics had announced Monday that it plans to study the effect of higher doses of its lead drug compound, Neotrofin, in treating Alzheimer's disease. The trial would last 12 weeks, shorter than the company had previously expected.

The company said results from previous studies show that subjects tolerated higher doses well.

"The shorter-than-expected trial period is positive for the company," said John Paulson, an analyst with Orbimed Advisors.

The $7 million in new financing was arranged for the company's 76%-owned subsidiary, NeoGene Technologies. NeoGene, which was established in 1999 in conjunction with UC Irvine, is NeoTherapeutics' vehicle for genetics-based drugs development. NeoTherapeutics' other subsidiary is NeoOnco RX, which develops anti-cancer drugs.

In September, NeoTherapeutics raised $5 million for NeoGene by selling a 10% stake in the unit. In December, the company raised an additional $2 million by selling a 4% stake.

The latest round of financing for NeoGene is to be used for research and development, and will make NeoGene "self-sufficient," NeoTherapeutics President Rajesh Shrotriya said.

The cash infusion, which was arranged by SG Cowen, comes at a time when NeoTherapeutics has filed a shelf registration document indicating it plans to raise as much as $50 million through the issuance of equities, debt and warrants. A shelf filing lets a company register securities in advance and sell them from time to time as needed.

The company also recently announced plans to raise about $3.5 million through the sale of 1.6 million shares to Amro International.

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