A Diagnostics & Imaging Week

Matritech (Newton, Massachusetts), a developer of proteomics-based diagnostic products, said it has entered into an agreement providing for a $12.55 million private placement for the sale of 1,426,124 shares of its Series A convertible preferred stock, each share of which is convertible into 10 shares of common stock, and five-year warrants to purchase 4,991,382 shares of common stock at an exercise price of $1.47 per share.

The first portion of the placement, involving $5.9 million in proceeds and resulting in sale of 670,272 shares of its Series A convertible preferred stock and all the warrants described above, has been closed. The second portion of the placement, for $6.65 million, is subject to stockholder approval.

Matritech's net proceeds from the first closing are about $5.4 million after deducting the estimated expenses and commissions in connection with the transaction. The company also has issued five-year placement agent warrants to purchase 670,284 shares of common stock at a price of $1.47 per share.

The private placement triggered the anti-dilution provisions in the company's 7.5% convertible debentures due March 31, 2006, and in the stock purchase warrants issued in connection with the convertible debentures financing. As a result, the convertible debentures are now convertible into an additional 869,623 shares of the company's common stock, and the March 2003 warrants may now be exercised at an exercise price of 88 cents per share.

The company said it intends to use the net proceeds from this private placement for research and development, working capital and general corporate purposes.

Matritech is using its proteomics technology to develop diagnostics for the detection of a variety of cancers. The company's first two products, the NMP22 Test Kit and NMP22 BladderChek Test, have been approved for the monitoring and diagnosis of bladder cancer.