Novelos Therapeutics enters into a definitive agreement with Purdue Pharma to raise funds

Aug 27 2009

Novelos Therapeutics, Inc. (OTCBB: NVLT), a biopharmaceutical company focused on the development of therapeutics to treat cancer and hepatitis, today announced that Novelos entered into a definitive agreement with Purdue Pharma L.P., an existing investor, to sell 13,636,364 shares of its common stock and warrants, expiring on December 31, 2015, to purchase an aggregate of approximately 4,772,728 shares of common stock at an exercise price of $0.66 per share, for gross proceeds of $9 million.

Pursuant to the definitive agreement with Purdue, Novelos initially sold to Purdue 5,303,030 shares of Novelos’ common stock and warrants to purchase 1,856,062 shares of its common stock for gross proceeds of $3.5 million. Subsequent closing(s) for the remaining $5.5 million will be subject to availability of additional authorized shares.

Novelos also agreed to negotiate with Purdue for rights to license, develop and commercialize NOV-002 in the United States on an exclusive basis until the conclusion of the pivotal Phase 3 trial for non-small cell lung cancer under a Special Protocol Assessment (SPA) and Fast Track. The Phase 3 trial is expected to conclude in early 2010. Novelos also granted Purdue a conditional right of first refusal to acquire rights to NOV-002 in the United States after the conclusion of the Phase 3 trial. Novelos already has a partnership with Mundipharma, an independent associated company of Purdue, to develop and commercialize NOV-002 in Europe and Asia (excluding China). Novelos has also entered into a separate agreement to exclusively negotiate with Mundipharma and its independent associated company on a conditional basis for the rights to NOV-002 in Canada, Mexico and Latin America, as well as granting Mundipharma and its independent associated company a conditional right of first refusal to the NOV-002 rights in such territories upon the conclusion of the exclusive negotiation period.

“I am very pleased with Purdue’s continued support, providing Novelos funds for a robust development program thru mid-2010,” said Harry Palmin, President and CEO of Novelos. “We expect our pivotal 900-patient Phase 3 lung cancer trial to conclude in early 2010. The trial was fully enrolled in March 2008, with the primary endpoint of increased median overall survival to be evaluated following the occurrence of 725 deaths.”

The common stock and warrants were / will be issued in a private placement transaction under Regulation D of the Securities of Act of 1933 and have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission (the “SEC”) or an applicable exemption from the registration requirements. Novelos has agreed to file a registration statement with the SEC covering resales of the common stock and the common stock issuable upon exercise of the warrants.