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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
NEOTHERAPEUTICS OBTAINS MAJOR FINANCING FOR CLINICAL STUDIES OF
NEOTROFIN(TM) FOR ALZHEIMER'S DISEASE
IRVINE, California - April 10, 2000--NeoTherapeutics, Inc. (Nasdaq: NEOT, NEOTW)
announced today the closing of a major financing transaction with two investor
groups who have previously invested with the Company. In conjunction with this
new financing, the investors have also eliminated the remaining reset provision
of a previous financing. The new transaction consists of an initial tranche at
the closing of $10 million in 5% subordinated convertible debentures due April
6, 2005. In addition, subject to certain conditions, the investors have agreed
to fund two future tranches of up to $10 million each and redeemable warrants to
purchase up to 4 million shares of common stock over a two-year period (the "B"
warrants). The "B" warrants can be redeemed in part by the Company as frequently
as several times per week and when called for redemption can be exercised by the
investors at 97% of the per share closing market price (i.e. a discount of 3%)
and are exercisable at the sole option of the investors at the price of $33.75
per share. Based on the current market price, the "B" warrants could potentially
generate approximately $69 million of equity financing. The number of "B"
warrants that are exercisable at each redemption are subject to average daily
volume restrictions.
The debentures are convertible into common stock at $20.25 per share for the
first 90 days after the closing. Thereafter, they are convertible at the lesser
of $20.25 per share or 101% of the market price of the common stock as
determined under the agreement. The two additional tranches of convertible
debentures of up to $10 million each, 5 and 10 months after the closing, are at
the option of either the Company or the investor. If at the option of the
Company, the tranches are under similar terms and conditions as the initial
tranche. If at the option of the investor, the two tranches are at the fixed
conversion price of $20 per share. The amount available under the two additional
tranches will be reduced pro-rata to the extent that the investors have
exercised or the Company has redeemed the "B" warrants to purchase common stock.
The investors also received five-year warrants to purchase up to 265,000 shares
of common stock (the "A" warrants). The "A" warrants are exercisable at $19.672
per share.
In connection with this financing, the investors, who are the same investors who
purchased $10 million in common stock on November 19, 1999, as well as other
financings, have agreed to eliminate the second reset available to them under
the November 1999 agreement. Accordingly, under the terms of that agreement, the
investors received an additional 43,383 shares of common stock under the terms
of the first reset provision which, when combined with their original purchase
at 108% of the market price, made the effective purchase price equal to
approximately 103% of the market price at that time.
"This financing, assuming completion of all segments, should allow
NeoTherapeutics to complete the existing Phase 2 clinical development program
for our lead product candidate, NEOTROFIN(TM) for Alzheimer's disease", stated
Sam Gulko, NeoTherapeutics' Chief Financial Officer. "Now we can devote
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NeoTherapeutics Obtains Major Financing for Clinical Stucies of NEOTROFIN(TM)
April 10, 2000
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financial and human resources towards developing NEOTROFIN(TM) for possible
treatment of other neurodegenerative conditions, as well as the expansion of our
functional genomics company, NeoGene Technologies, Inc. This is NeoTherapeutics'
fourth round of financing with these institutional investors, and our mutual
confidence has encouraged us to expand our relationship. We are very pleased
that this financing has been arranged so that we receive funds over time,
consistent with our needs, and that the agreement includes incremental pricing
consistent with the performance of NeoTherapeutics' stock as progress continues
in the clinical studies of NEOTROFIN(TM). Finally, this financing agreement
represents a significant advancement in NeoTherapeutics' ongoing efforts to
provide effective treatments to patients suffering from neurodegenerative
diseases."
NEOTROFIN(TM) is being developed for nerve repair and regeneration, with
Alzheimer's disease as its first clinical indication. Pre-clinical studies have
demonstrated that NEOTROFIN(TM) causes the production of multiple natural nerve
growth (neurotrophic) factors and restores function in animal models of
cognitive decline, aging, neuroprotection, and spinal cord injury. Human
clinical studies have demonstrated positive effects of NEOTROFIN(TM) on memory
and behavioral function in patients with Alzheimer's disease.
According to figures from the Alzheimer's Association, Alzheimer's disease
presently affects over 4 million people in the U.S. and approximately 12 million
patients worldwide, with associated health care costs of $80-$100 billion per
year. Drugs such as Aricept(R), developed by Eisai and marketed by both Eisai
and Pfizer, and the soon to be marketed Exelon(R), developed by Novartis, have
been approved for the treatment of symptoms of mild to moderate Alzheimer's
disease.
NeoTherapeutics' research program is focused on designing and developing small
molecules capable of treating a range of neurological diseases and conditions
such as Alzheimer's and Parkinson's diseases, stroke, and spinal cord injury.
Additional compounds in NeoTherapeutics' product pipeline address other health
issues such as migraine and depression. NeoGene Technologies, Inc.,
NeoTherapeutics' subsidiary, is a functional genomics company engaged in the
development of a broad platform of enabling technology called receptor-targeted
drug design. NeoGene Technologies is using this technology to search for natural
and synthetic compounds that can potentially be developed as drugs for treating
various diseases. For additional Company information, visit the NeoTherapeutics
web site at www.neotherapeutics.com.
This press release contains forward-looking statements regarding future events
and the future performance of NeoTherapeutics that involve risks and
uncertainties that could cause actual results to differ materially. These risks
are described in further detail in the Company's reports filed with the
Securities and Exchange Commission.
CONTACTS:
Investment Community: Media:
Carol Gruetter Kelly Finley
NeoTherapeutics, Inc. Halsted Communications, Inc.
Tel: (949) 788-6700 Tel: (800) 600-7111 x.233
e-mail: cgruetter@neotherapeutics.com (323) 225-1835
e-mail: kfinley@halsted.com
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