Cortex Pharmaceuticals Inc. is the latest biopharmaceuticalcompany to take advantage of the PIPE (private investment inpublic equity) financing vehicle, which gained popularity thissummer as a means for publicly traded biotechnologycompanies to raise capital in an otherwise chilly financingenvironment.

Cortex of Irvine, Calif., announced Tuesday that it has raised$13.75 million by placing 13.75 million newly issued shares ofcommon stock (NASDAQ:CORX) with institutional and individualinvestors at $1 a share.

The investors "came in over the last several months," duringwhich the stock's publicly traded price ranged from $1.63 to$1.88 (where it closed on Monday, the day the financing wascompleted), explained Alan Steigrod, president and chiefexecutive officer of Cortex. This means the new investorsbought their shares at a discount of anywhere from 39 to 47percent to the market.

The transaction will be complete when the S-2 registrationstatement Cortex filed with the Securities and ExchangeCommission (SEC) becomes effective. The company then will getthe proceeds from the offering and the new shares will befreely tradable.

The transaction was arranged by Vector SecuritiesInternational Inc. In connection with the offering, Vector willreceive five-year warrants to purchase 1,375,000 shares ofcommon stock at $1.88 per share.

Cortex also announced that it raised $660,000 from a privateoffshore financing. This financing, which closed Oct. 22,involved the sale of 517,884 newly issued shares of commonstock to four investors at $1.28 per share. Cortex will use themoney it raised through this for operating capital, Steigrod toldBioWorld.

The neurotech company will apply the $13.75 million towardgetting several of its lead compounds into clinical trials. "Thisshould take us two years, by which time our goal is to havefiled two investigational new drug (IND) applications andpossibly be in the clinic on two projects," Steigrod said. Theseinclude a cognition enhancer, for which the company intends tofile an IND by the second quarter of 1994 (see BioWorld, Nov.4), and a treatment for cerebral vasospasm (with an IND slatedfor the fourth quarter of 1994).

Cortex, which concentrates its drug discovery and developmentefforts on compounds for treating age-related memoryimpairment and cognitive deficits, went public in July 1989,when it raised $6.6 million through the sale of 1.1 million unitsat $6 each. The units consisted of one share of common stockand two class A warrants, explained Scott Hagen, Cortex's chieffinancial officer and vice president. At the same time, thecommon stock started trading separately at $1.63 a share,Hagen told BioWorld.

In May 1991, Cortex raised an additional $2.1 million in aprivate placement of close to 3.2 million shares of series Bconvertible preferred stock and 1 million class C warrants.

Cortex brought in an added $3.6 million in research paymentsand license fees from its corporate partnering agreement withAlkermes Inc. The two companies agreed in January 1992 tocollaborate on the development of enzyme inhibitors fortreating stroke and other degenerative brain disorders.

Cortex had about $1.15 million in cash, cash equivalents andshort-term investments as of June 30 and 16 million sharesoutstanding, according to Hagen.

The stock closed unchanged on Tuesday at $1.88 a share.

-- Jennifer Van Brunt Senior Editor

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