In their second investment in Orange County in recent weeks, Chicago financier Irving B. Harris and his associates have acquired 5.4% of Pharmatec Inc. for about $500,000 in cash and may buy a bigger stake in the 2-year-old Santa Ana drug company.
The purchase was revealed in documents filed Monday with the Securities and Exchange Commission. A similar filing last week showed that Harris and associates recently purchased a 5.6% stake worth about $500,000 in Trimedyne Inc., a medical laser device manufacturer also headquartered in Santa Ana.
A report must be filed with the SEC whenever 5% or more of a company's stock is purchased.
Marvin P. Loeb, who describes himself as a medical entrepreneur, is the founder, chairman and principal shareholder of both Pharmatec and Trimedyne. Loeb said the investment by Harris and his associates shows that "they are following what I'm doing, they're following the technology."
Harris said in an interview from his Chicago office that his investment in the two companies totals "less than $1 million," which he does "not consider a significant amount of money." He said that even though he might buy additional shares in the Santa Ana companies, he had no intention of becoming involved in either's day-to-day operation.
Loeb said that Harris purchased his shares in over-the-counter trading and in private transactions.
Pharmatec, which had $238,000 in profits on $300,000 in revenues for the nine months ended Sept. 30, is developing a chemical "carrier" that will hook onto therapeutic drugs and carry them to the brain.
Pharmatec President Richard G. Power said the brain has a densely packed group of cells that act as gatekeepers to prevent certain materials from reaching it, including beneficial drugs like anti-depressants and anti-convulsants.
Power said that the chemical, which Pharmatec licenses from the University of Florida, has the potential to carry drugs past the brain-cell barrier and also to decrease side-effects by reducing concentrations of the drugs in other areas of body.
Loeb said that although Pharmatec does not yet have a product on the market, the company has signed agreements with the DuPont Co. to develop the chemical for use with radioactive drugs needed in diagnostic imaging. He said the company also has signed a similar agreement with a Japanese company called Nihon Medi Physics, which he said is a joint venture between Hoffmann La Roche Inc. and Sumitomo Chemical Company Ltd.