Medarex Inc. shareholders exercised warrants to purchase nearly fivemillion common shares, resulting in gross proceeds to Medarex of$23.6 million.

The Annandale, N.J., company said late Thursday it temporarilyreduced the exercise price of warrants issued in 1991 and 1992 from$6.17 to $5.55, resulting in holders of 3.9 million warrants exercisingthem for 4.5 million shares. Previously warrants had been exercisedon about 360,000 shares at the higher price.

Outstanding warrants representing about 3 percent of the total stillcan be exercised by the end of June 1996 at $6.17. Medarex now hasabout 16.8 million shares outstanding.

"This will bring us close to $35 million in cash, which will allow usto move forward even more aggressively on our product developmentprograms," said Medarex president and CEO Donald Drakeman."Our burn last year was in the $7 million range. From the beginningof the company [in 1987] we've spent a total of $25 million. With$35 million in the bank we feel we're in a strong position to moveforward."

Despite the dilutive effects of adding nearly five million shares at adiscounted price, Medarex's stock continued to appreciate, closingFriday at $11.50, up 63 cents. The stock was less than $7 a monthago and at $5.38 after a November 1995 direct placement of shares at$5 each.

Medarex is developing products called Bispecific antibodies, whichlink fragments of monoclonal antibodies to bind both to diseasedcells and immune system killer cells. The company has five productsin clinical trials, two of them with partners, and last month broughton a third partner, Centeon LLC, to develop MDX-33, the "trigger"antibody used in the Bispecific products, for blood-relatedautoimmune disorders. (See BioWorld Today, April 30, 1996, p. 1.)

Drakeman said the significant stock increase in recent months couldbe attributed to a number of factors.

"There are some fundamental things going on at Medarex, one ofwhich is the new corporate partnership that provides not onlyresources and technology validation but highlights a product inMedarex's portfolio that's been given a little less attention in thepast," he said.

Centeon, of King of Prussia, Pa., will pay clinical development costsfor MDX-33 as well as license and technology fees. Medarex alsocould get $10 million in milestone payments and royalties on sales.

Drakeman said other factors helping Medarex are the increasingattention investors are paying to the biotech industry, and increasedvisibility the company has received because of the efforts of variousinvestment banking firms. On Thursday Alex. Brown & Sons Inc.analyst Kevin Tang issued a strong buy recommendation forMedarex, saying the company was undervalued relative to itscommercial potential and comparable companies.

Merck KGaA, of Darmstadt, Germany, and Medarex are in Phase I/IIstudies with MDX-447 for cancers that express epidermal growthfactor receptors. Medarex and Ciba-Geigy Ltd., of Basel,Switzerland, plan to start Phase II trials this summer on MDX-210for cancers that express the HER-2 protein. On its own Medarex hastwo products in the clinic (MDX-11 and MDX-22) for leukemia andone (MDX-240) for HIV.

Drakeman said Medarex is in discussions with potential corporatecollaborators for the unpartnered products in the clinic and othersthat haven't been discussed publicly. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.