By Lisa Seachrist

Washington Editor

WASHINGTON — Techniclone Corp. has secured a $20 million line of equity-based credit with two institutional investors to fund a clinical program that includes treatments for lymphoma and solid tumors.

Under terms of the funding, Techniclone will receive $3.5 million in exchange for common stock priced at the current market value. Techniclone has no obligation to utilize any additional funds.

"The $3.5 million adds significantly to the cash available over the next few months," said William "Bix" Moding, chief financial officer for the Tustin, Calif.-based company. "For the long term, we are looking for significant corporate partnerships. We are very active in that arena right now."

The financing comes at a time when the company has approximately $2.5 million in cash and obligations to fund two clinical trials: a Phase III trial of Oncolym, a monoclonal antibody linked to a therapeutic radioactive isotope for treatment of intermediate and high-grade non-Hodgkin's B cell lymphoma, and a Phase I trial of radioactive chimeric tumor necrosis therapy (TNT) for malignant glioma. Moding estimates the company's quarterly burn at around $3 million.

While the firm is seeking marketing partners to cover clinical trials in Oncolym and research and development for some earlier-stage technologies, guaranteed access to cash will offer some stability and flexibility. The remaining $16.5 million is available to Techniclone through June 2001 at the company's discretion. All additional sales of stock will be priced at a 15 percent discount to market price.

European Deal Shelved For 'Straightforward Vehicle'

In February, Techniclone was looking to European investors for a $20 million private placement that could have expanded to a deal worth $60 million and launched a European subsidiary of Techniclone. At the time, the company's stock was trading at under $1, with suspiciously high volumes.

The company initiated an investigation into the trading; however, there is currently no intention of releasing the results. The new financing mechanism takes the place of the European deal.

"That financing became very involved, so we opted for a more straightforward vehicle," Moding said. "The timing is really right to put together this type of financing. The dilution of our stock will be minimal if we are successful in getting corporate partners."

Oncolym is likely to be an attractive program for a company looking to move quickly to marketing a new therapy for intermediate and high-grade non-Hodgkin's' B cell lymphoma, for which there are few treatment options. Several reports on Oncolym from the Annual Society of Nuclear Medicine meeting in Toronto concluded that radioimmunotherapy would become an important treatment for lymphoma.

Moding said the company intends to continue developing TNT for a wide variety of solid tumors while searching for R&D partners for Vascular Targeting Agents and Vasopermeation Enhancement Agents to attack solid tumors.

Techniclone's stock (NASDAQ:TCLN) closed at $1.50, unchanged. *