Novelos to raise $15 million

Massachusetts, USA-based Novelos Therapeutics, which is focused on the development of therapeutics to treat cancer and hepatitis, has entered into a definitive agreement with institutional investors to raise $15.0 million in gross proceeds through the sale of shares of a new series of its convertible preferred stock and warrants. The firm has agreed to sell 1,500 shares of series B convertible preferred stock, having a stated value equal to $10,000 each, a cumulative annual dividend of 9% of stated value and a conversion price of $1.00 per share. Investors will also receive warrants, callable in certain circumstances, expiring in five years to buy an aggregate of 7,500,000 shares at an exercise price of $1.25 each.

The investors include Xmark Opportunity Funds, OrbiMed Advisors, and other selected institutional groups. Rodman & Renshaw is serving as the placement agent, and Emerging Growth Equities as the sub-placement agent for the transaction.

The financing will provide funds for Novelos' current development program through mid-2008," said Harry Palmin, the firm's chief executive. "Furthermore, if all the warrants are exercised for cash, Novelos would receive about $10.0 million of additional proceeds. Fundamentally, we continue to anticipate that our pivotal Phase III lung cancer trial will be fully enrolled by the end of the first quarter of 2008. Meanwhile, we expect earlier-stage clinical trial results later this year," he said.