Pharmos
Completes $21 Million Convertible Debt
Transaction with Institutional Investors
Iselin
NJ, September 30, 2003 -Pharmos Corporation (Nasdaq:
PARS and Nasdaq Europe: PHRM) announced today that it
has completed a $21 million convertible debt financing
with six institutional investors. Five million dollars
of the proceeds will be used for working capital purposes,
and $16 million will be available to fund acquisitions
upon the approval of the investors. Pharmos also issued
warrants exercisable into shares of common stock as part
of the transaction.
"This acquisition facility could provide financial
resources to Pharmos as we pursue strategic options to
expand our pipeline beyond our lead product in development,"
commented Haim Aviv, Ph.D., Pharmos' Chairman and CEO.
"This financing also addresses a matter Nasdaq has
raised informally concerning Pharmos' possible, though
inadvertent, violation of a corporate governance rule.
Completion of the $21 million convertible debt financing
resolves this issue."
The convertible debentures are convertible
into common stock of the Company at a fixed price of $4.04,
205% above the closing price of the stock for the five
days preceding the closing date. The debentures, which
bear an interest rate of 4%, will be redeemed in 13 substantially
equal monthly increments beginning March 31, 2004. Amounts
converted into shares of Pharmos common stock will reduce
the monthly redemption amount in inverse order of maturity.
The $16 million earmarked for acquisition activity will
be held in escrow until used or repaid. In connection
with the financing, the Company also issued three-year
warrants to purchase five million shares of common stock
at a price of $2.04. The Company has agreed to file a
registration statement with the Securities and Exchange
Commission within thirty days to permit resales of the
common stock underlying the convertible debentures and
the warrants. Rodman & Renshaw, Inc. acted as placement
agent for this transaction.
Pharmos discovers, develops, and commercializes
novel therapeutics to treat a range of indications, in
particular neurological and inflammation-based disorders.
The Company's first neuroprotective product is dexanabinol,
a tricyclic dextrocannabinoid, currently undergoing clinical
testing as a treatment for TBI and as a preventive agent
against post-surgical cognitive impairment. Other dextrocannabinoid
compounds and selective CB2 receptor agonist compounds
from Pharmos' proprietary synthetic cannabinoid library
are being studied in pre-clinical programs targeting a
variety of other disorders.
Statements made in this press release
related to the business outlook and future financial performance
of the Company, to the prospective market penetration
of its drug products, to the development and commercialization
of the Company's pipeline products and to the Company's
expectations in connection with any future event, condition,
performance or other matter, are forward-looking and are
made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. Such statements involve
risks and uncertainties which may cause results to differ
materially from those set forth in these statements. Additional
economic, competitive, governmental, technological, marketing
and other factors identified in Pharmos' filings with
the Securities and Exchange Commission could affect such
results.
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