A Diagnostics & Imaging Week

Neoprobe (Dublin, Ohio), a developer of oncology and cardiovascular surgical and diagnostic products, said it has signed agreements for a $13 million financing from Platinum Montaur Life Sciences.

The first funding under the securities purchase agreement is for $7 million, which will be used to repay in full $5.7 million in notes that were due in January 2009, Neoprobe said. In addition, funding from the first closing will retire more than 10.12 million in warrants to purchase shares of Neoprobe common stock that were associated with the notes due in 2009.

Neoprobe said that Montaur has committed to additional funding, aggregating to $6 million, that will be used to support the development of Lymphoseek.

Lymphoseek (Technetium Tc99m DTPA-mannosyl-dextran) is a radioactive lymphatic mapping targeting agent being developed by Neoprobe for use with handheld gamma detection devices, such as Neoprobe’s neo2000 system. After achieving positive efficacy results in recently completed Phase II multi-center clinical trials for Lymphoseek, Neoprobe has said it will move forward with preparations for two Phase III clinical trials; one in breast cancer and one in melanoma.

David Bupp, Neoprobe’s president/CEO, said that the financing “provides us with the financial resources to complete the clinical and other development activities associated with Lymphoseek. Coupled with the recently completed marketing and distribution agreement for Lymphoseek in the United States, and the recently extended marketing agreement for our gamma detection device products ... . Neoprobe is prepared to take the next steps in our evolution as a multiple product biomedical company, with both device and drug revenues.”

The first funding of $7 million is in the form of a secured note, due December 2011, partially convertible at the option of Montaur into shares of Neoprobe common stock at a negotiated fixed conversion price of 26 cents. If Montaur converts all of the first note into common stock Neoprobe would issue 13,461,538 shares of common stock to Montaur.

In addition, Neoprobe issued to Montaur warrants to purchase 6 million shares of common stock at 32 cents a share.

A second funding of $3 million will occur upon the commencement of the Phase III clinical studies of Lymphoseek. The second funding will be in the form of a secured note payable December 2011. The second note will be convertible at the option of Montaur into shares of Neoprobe stock at the lesser of 40 cents a share or the closing price of Neoprobe common stock prior to closing. At the second closing Neoprobe will issue to Montaur warrants to purchase an amount of shares of Neoprobe common stock equal to the number of conversion shares at 115% of the conversion price of the second note.

Finally, a third funding of $3 million will occur upon the completion of the enrollment of 200 evaluable patients in the Phase III clinical studies of Lymphoseek.

This funding will be in the form of convertible preferred stock of Neoprobe, fully convertible at the option of Montaur into shares of Neoprobe common stock at the lesser of 50 cents a share or the closing price of Neoprobe common stock prior to closing. In addition, Neoprobe will issue to Montaur warrants to purchase an amount of shares of Neoprobe common stock equal to the number of conversion shares at 115% of the conversion price of the preferred stock.

WBB Securities served as the placement agent on the transaction with Montaur.

In other financing news:

• InSight Health Services (Lake Forest, California) reported an exchange offer for $12.5 million of registered senior secured floating rate notes due 2011.

The company said it would accept for exchange any and all outstanding notes, which are properly tendered in the exchange offer by midnight, EST, on Jan. 25.

InSight provides diagnostic imaging services. It serves managed care entities, hospitals and other contractual customers in more than 30 states in the U.S.

• AMDL (Tustin, California), a developer of tests for the early detection of cancer and other serious diseases, reported the closing of its combined Regulation D/Regulation S private unit offering of 2,007,508 shares of common stock and warrants to buy 1,003,755 shares of common stock, generating net proceeds of about $5,433,000.

The shares of AMDL common stock were sold at $3.09 a share and the four-year warrants included in the units are exercisable at $4.74 a share. Warrants to buy an additional 200,751 shares were issued to AMDL’s placement agents at the same exercise price.

• ProUroCare Medical (Minneapolis) reported that it has closed a private placement of $1.05 million units consisting of unsecured, subordinated, convertible promissory notes and common stock purchase warrants.

At closing, ProUroCare issued $997,500 in principal amount of notes, and warrants to purchase 2.1 million shares of common stock. The notes bear interest at 10% per year, mature on June 27, 2009, and will convert into the type of equity securities offered by the company in any underwritten public offering prior to maturity at 70% of the public offering price. The warrants will become exercisable upon the earlier of the closing of a public offering or the maturity date of the notes, and will remain exercisable until Dec. 31, 2012. The exercise price will be 50% of the public offering price, or in the event a public offering is not completed before the maturity date, at 50% of the closing price of the company’s common stock on the maturity date.