Immunomedics Inc. completed a unique financing arrangementWednesday that will raise $10 million for the Morris Plains, N.J.,company.

The deal calls for investors to convert their preferred shares intocommon stock over the next few years at predetermined discounts tothe average price during the conversion period. The discounts rangefrom the single digits to about 20 percent, depending on the stock'sprice at the time.

"That's the beauty of this," Amy Factor, the company's executivevice president, told BioWorld. "It's incentive for the investor to seethe stock go up as well. The higher the price is the better the investoris and the better the company is because we're not giving out asmany shares.

"The real intent was that the investors' objective and the company'sobjective are in sync. We both want to see the stock go up."

The convertible stock was sold to investors outside the U.S., Factorsaid. A group of investors purchased $7.5 million of non-dividendpaying stock. It can be converted at any time between March 1995and January 1997. At the company's discretion, one investor willpurchase an additional $2.5 million of convertible preferred stock inJune 1995 under similar terms.

Factor said there are five or six stock price ranges, "from the mid-single digits into the 20 percent discount range." The discount tomarket price increases as the stock price goes up, until it reaches acertain point, when the discount returns to single digit percentages.

"In effect we have $7.5 million put in which we can have theinvestors buy another $2.5 million worth of the convertible preferredstock in June," Factor said. "This gives us about two years' worth ofcash," or about $29 million.

"We had $19 million, so we were able to structure such an attractivefinancing vehicle because we weren't desperate for cash," she said.Immunomedics has about 30 million shares outstanding. Its stock(NASDAQ:IMMU) closed at $3.88 Wednesday, up 25 cents pershare.

The company plans to use the money to continue advancing itsdiagnostic product candidates, and move its first therapeutic productinto the clinic.

Immunomedics is in the process of scheduling a prefiling productlicense application (PLA) meeting with the FDA for LeukoScan, aninfectious disease imaging agent. LeukoScan has completed PhaseIII trial in detecting infection in the bone and in detecting infection indiabetic foot ulcers.

The company isn't releasing specific data from the trials, but Factorsaid LeukoScan "was effective in detecting and differentiatingbetween infection in bone and soft tissue."

A PLA was filed more than three years ago for the company'scolorectal cancer imaging agent, CEA-Scan, formerly calledImmuRAID-CEA. In May, the FDA told Immunomedics thatImmuRAID-CEA is not approvable. Factor said the companycontinues to analyze trial data to identify an approvable claim.

Also in the clinic is the company's LymphoScan, formerly calledImmuRAID-LL2, for the detection of lymphoma.

Factor said a company goal is to get one of its five humanizedantibodies into human clinical trials for cancer. She gave no timeframe. n

-- Jim Shrine

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