A Diagnostics & Imaging Week

Neoprobe (Dublin, Ohio), developer of diagnostic, oncology and surgical products, reported that it had completed negotiations for the elimination of certain note covenants and the modification of the maturity of the notes with Great Point Partners, the holder of $8 million in secured notes that were originally due on Dec. 13, 2008.

Separately, Neoprobe reported signing an agreement with Fusion Capital Fund II (Chicago) for the purchase of up to $6 million in common stock.

Great Point has agreed to eliminate the revenue and cash covenants that were in the original notes through the remaining term of the notes. In exchange for the elimination of the note covenants, Great Point will receive an increased annual interest rate of 12%. Neoprobe gains the option of repaying the notes early without penalty but will be required to pay a portion of proceeds from certain transactions, such as equity raises, to the note holders.

Great Point will retain the option to convert its notes into Neoprobe common shares at a fixed conversion price of 40 cents per share but has waived anti-dilution rights under the notes. Additionally, the parties agreed to modify the repayment schedule to include periodic repayments over the course of 2007 and 2008, and to extend the final maturity of the notes to Jan. 7, 2009.

David Bupp, Neoprobe' president/CEO, said, "The elimination of the key note covenants, the relief from anti-dilution protection and the ability of the company to retire the notes without any prepayment penalty provides Neoprobe with considerable flexibility to manage its capital structure going forward, all without any incremental dilution to the shareholders of Neoprobe."

The sale of stock to Fusion Capital can occur over a 24-month period after the Securities and Exchange Commission has declared effective a registration statement relating to the transaction.

Neoprobe has the right to sell shares of its common stock to Fusion in amounts between $50,000 and $1 million up to $6 million. The price of the shares will be determined based upon the market price of the company's shares at the time of each sale without any fixed discount, and Neoprobe will control the timing and amount of any sales of shares to Fusion Capital.

• BioMag (Orangevale, California) reported that it has completed a third private placement in the amount of $250,000, bringing the total funds raised since July 11, 2006, to $750,000.

The company said that the funds will be used for design concepts, rendering and verification of the company's HTS-MTP technology as well as other operating expenses, it said.

BioMag, through its wholly owned subsidiary Biospectrum Technologies (also Orangevale), is developing diagnostic tests for viral infections. It hopes to collaborate with a Canadian biotechnology company to conduct clinical trials in China, and has an agreement with a diagnostic services company in Bangkok to obtain approval for clinical trials in Thailand.

• Oragenics (Alachua, Florida) reported that it has filed a U.S. patent application covering a collection of 44 genes of Mycobacterium tuberculosis (TB) that are specifically induced during active infection of human patients.

Initial funding for this TB project was provided through a competitive Small Business Innovative Research grant from the National Institutes of Research. The company said, however, that additional funding will be necessary.

The company reported that the early exercise of stock warrants by a member of the company's board has brought $420,000 into the company. When combined with existing cash, this additional funding, reduced by a current monthly burn rate estimated at $150,000, should result, it said, in the company having sufficient funding through 1Q07.

The identification of these gene targets offers the promise of a new TB test to meet a critical worldwide need, and could potentially serve as the basis for an effective new vaccine against tuberculosis infection, the company said.

These new TB gene targets were discovered using the IVIAT technology, now exclusively owned by Oragenics as a result of the recent acquisition of iviGene. IVIAT, or In Vivo Induced Antigen Technology, is a discovery platform designed to identify genes of pathogenic bacteria that are specifically expressed during actual human infections.

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