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Alzheimer's drug developer gets $20 million

by Jeanhee Kim

Biotechnology firm Axonyx Inc. says it has entered agreements with new institutional investors for a $20 million private placement, its third such financing deal in the past nine months.

The Manhattan-based company says it will use the proceeds to buy new technologies and fund working capital requirements focused on its core concern: central nervous system disorders, including Alzheimer's, Parkinson's and Lou Gehrig's diseases. Axonyx will sell 3.1 million shares at $6.50 each and issue five-year warrants for nearly 1 million more shares at $8.50 apiece. The increasing price of each private placement--last September 2003, the price was $3.25, and last January 2004 at $5.15--is a positive sign, "indicating that the company is perceived to be making progress," says Matthew Kaplan, senior biotech analyst at Punk Ziegel & Co., who rates the company a “buy.”

Axonyx’s lead product, an Alzheimer’s drug called phenserine, is in Phase III trials to evaluate its ability to improve memory. Phase II studies are looking at its ability to slow the progression of the disease. "We may have the first Alzheimer's drug that is a true disease modifier," says Chief Financial Officer Colin Neill. Both trials are taking place in Europe and are expected to be finished by the end of this year. Under the best-case scenario, Axonyx would apply for U.S. FDA approval in 2006, says Mr. Neill.

The company's stock, which traded as high as $20.75 in March 2000 and as low as 51 cents in late 2002, closed Thursday at $7.21. It was down 6.8% at 12:40 p.m. Tuesday, to $6.72.
Copyright 2004, Crain Communications, Inc

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