April 22, 2009 (FinancialWire) — Pharmos Corp. (OTC: PARS) (Current Market Cap: US$2.39 Mil.) said it has completed a private placement of common stock and warrants for an aggregate of $1.8 million.

At the closing, the company issued 18 million shares of common stock and warrants exercisable for an additional 18 million shares. The exercise price of the warrants, which have a five-year term, is $0.12 per share.

The three purchasers were existing investors in Pharmos, including Venrock Associates, which is affiliated with Pharmos director Anthony B. Evnin. The other investors were New Enterprise Associates, which is affiliated with Pharmos director Charles W. Newhall, and a trust affiliated with Pharmos’ executive chairman Robert F. Johnston.

Venrock Associates, New Enterprise Associates and Johnston also agreed to convert the company’s 10% convertible debentures due November 1, 2012, which were held by them, at a conversion price of $0.275 per share. The debentures had a value of $3 million in principal amount. Accrued but unpaid interest on their debentures, aggregating $80,403, was also converted at the closing, at a conversion price of $0.34 per share.

In total, 11,145,569 shares was issued at the closing upon conversion of the principal and accrued but unpaid interest on the debentures.

Pharmos said it will use the proceeds from the private placement to fund completion of its ongoing Dextofisopam Phase 2b trial and company operations through 2009. If the trial is successful, this financing would also support additional efforts to negotiate a strategic partnership or license arrangement with a pharmaceutical company.

Iselin, New Jersey-based Pharmos develops novel therapeutics to treat a range of indications including specific diseases of the nervous system such as disorders of the brain-gut axis, pain and inflammation, and autoimmune disorders.

The company’s lead product in development, Dextofisopam, is undergoing Phase 2b testing in IBS patients.

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