Little Cortex Finds Big Admirer : Stock: The Irvine pharmaceuticals firm’s shares soar at news that global investor George Soros has bought in.

In what some industry watchers are calling an endorsement of its strategy, tiny Cortex Pharmaceuticals Inc. said Thursday that a group including global investor George Soros has acquired 18.1% of its stock.

The news sent Cortex stock soaring almost 50% to $3 in heavy trading on the Nasdaq market before closing at $2.38 a share, up 32 cents for the day and more than doubling, on paper, the Soros group’s money.

Soros Quantum Fund, based in New York, acquired 5.5 million shares of Cortex common stock for $5.5 million--or $1 a share--in a private placement of 13.75 million shares last week.

Cortex is involved in research into medications for treatment of memory loss, halting the advance of Alzheimer’s disease, reversing brain damage after cerebral hemorrhages and suppressing the pain associated with many cancer and AIDS treatments.

An analyst who follows the company said the Soros purchase puts the company into play but cautioned that Cortex, which was founded in 1987, still faces all the problems of any start-up drug research firm.

Alan A. Steigrod, Cortex president and chief executive, said Thursday afternoon that phones at the company’s headquarters and research facility in Irvine had been ringing constantly with calls from potential investors since news of the Soros investment was released earlier in the day.

Soros is an internationally known investor and speculator active in real estate, gold and minerals, telecommunications and pharmaceuticals.

Steigrod said several other major investment funds are acquiring sizable stakes in the company through the private placement. He said he could not identify them until a registration statement is filed with the Securities and Exchange Commission, probably today.

Scott Hagen, Cortex chief financial officer, said the company has had difficulty attracting institutional investors until now. “George Soros and the people associated with him are serious investors who take a long, hard look before they invest,” he said. “It brings a certain amount of credibility to the company.”

Edmund A. Debler, an analyst with the New York investment research firm Mehta and Isaly, said the Soros group’s investment “is getting (Cortex) back into the game. They are a real turnaround. The previous management had drifted away from the company’s focus on research. . . . Steigrod came in and is going back to the basic research.”

Steigrod, who was hired in February, said he plans to use some proceeds from the private placement to increase the company’s payroll from 20 employees now to 35 over the next 12 months as research efforts intensify.

For its latest fiscal year, Cortex reported a loss of $762,000 on revenue of $2.6 million--most of it research and licensing fees from a project that ended with the fiscal period on June 30. For the first three months of its current fiscal year, Hagen said, the company lost $826,000 and had revenue of just $33,000, all from a grant.

Steigrod said the company is involved in a number of projects and cited three he said attracted the Soros group: development of a memory-enhancement drug for patients with Alzheimer’s disease, mild dementia or memory deficits that affect the elderly; a project with researchers at UC Irvine to find methods of halting the advance of Alzheimer’s; and development of a treatment to reverse the closing down of arteries in the brain that usually follows a hemorrhage or arterial spasm.

Cortex--the name comes from the part of the brain that interprets and correlates sensory impressions--also is working with researchers at UCI and other universities on medication to prevent the significant pain and numbness in the limbs that accompanies chemical infusion therapies used for many cancers and in some AIDS treatments.

Steigrod said that, while the Soros group is now the company’s largest shareholder, there has been no discussion of the investment fund taking an active role in management. “If it were suggested, we’d certainly be receptive to discussing the idea,” he said.