By Debbie Strickland

Staff Writer

Techniclone Corporation plans to follow a $12 million sale of convertible preferred stock announced Monday by filing for a spot on Nasdaq's national market in the next 60 to 90 days. Shares in the Tustin, Calif.-based cancer therapeutics company are currently traded on Nasdaq's small capital market.

"With this financing, we believe we meet the entry criteria for the national market," said William Moding, chief financial officer.

Techniclone's stock (NASDAQ:TCLN) closed Monday at $4.625, up $0.063.

The deal involves the sale of $12 million worth of stock in a private placement to a small group of undisclosed institutional investors. Moding said additional details will be made public when the company files an 8-K disclosure with the Securities and Exchange Commission.

Excluding related costs, the new investment would multiply the company's cash on hand -- currently $1.5 million -- by 900 percent. Techniclone's operating expenses have been running between $450,000 and $500,000 per month.

Cappello and Laffer Capital Corp., of Santa Monica, Calif., handled the placement, which is expected to provide for Techniclone's capital needs over the next 12 to 15 months.

"This is an important strategic funding for the company," said Lon Stone, president and CEO. "It provides us with the necessary capital to meet important production and radiolabeling requirements for LYM-1, our lead technology for the treatment of non-Hodgkin's B-cell lymphoma. This funding brings us one step closer to commercialization."

The financing also will contribute to working capital; to Techniclone's share of the Phase I tumor necrosis therapy clinical trial in the U.S. and Europe, jointly sponsored with the United Kingdom's Cambridge Antibody Technology; and to the development of other drug candidates, including vascular targeting agents (VTAs), made possible through the pending acquisition of Peregrine Pharmaceuticals Inc.

But right now Techniclone's top research priority is the development of I-131 LYM-1, trademarked as Oncolym, which Moding termed the company's "lead product." The Phase III trial will soon expand from five to 20 U.S. hospitals, now that special imaging studies required by the Food and Drug Administration have been completed.

In Oncolym, the LYM-1 monoclonal antibody is linked to a radioactive isotope and injected into the bloodstream. According to the company, LYM-1 guides the toxic isotope to the cancerous tissue, with minimal adverse effect on healthy tissue.

"We're hopeful to finish patient testing within the next 12 months, maybe sooner," Moding said. "About a year from now at the latest, we expect to be able to submit LYM-1 to the FDA for approval."

Techniclone currently has no product on the market.

The company's $24.8 million stock-swap acquisition of Princeton, N.J.-based Peregrine, announced in January, is now "in the final stage" and should be completed in two to four weeks, Moding estimated. California state "administrative issues" have slowed the closing, he said.

With the consummation of that deal, Techniclone will acquire Peregrine's vascular targeting agents, which are monoclonal antibodies that deliver a thrombotic agent to clog blood vessels of cancerous tumors, killing the cells. The company hopes to develop VTAs as a stand-alone treatment, along with its own tumor necrosis therapy, which uses monoclonal antibodies to deliver cancer-killing agents inside tumor cells rather than to the surface membrane, which is the target for most other anticancer antibodies. *