NTII Neurobiological Technologies (MM)

Dutton Associates updates its coverage of Neurobiological Technologies (Nasdaq: NTII) maintaining a Strong Speculative Buy rating and a 12 month target price of $6. The 12-page report by Dutton senior analyst Denise T. Resnik, M.S. is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals. Neurobiological Technologies� major research effort is being concentrated on Phase III clinical trials of Viprinex� (treatment of acute ischemic stroke), a world-wide market approaching $2 billion. Although partial funding for the Viprinex program was achieved through the sale of rights and assets of Xerecept�, and by an increasing stream of royalties related to sales of memantine, it was necessary to raise substantial additional funds externally through the sale of equity. The Company was unable to accomplish this without significant dilution. Although a recently completed stock offering assures full funding for the Viprinex Phase III trials, the resulting dilution and a prior bridge loan reduced the prior shareholders� share of the Company to only 17%. However, this Company�s current market capitalization of $61.2 million is little changed from that at the time of our April 2007 Report, which was $62.1 million. Given the additional progress achieved in moving forward with the Viprinex trials and the attainment of sufficient funding to potentially bring this drug to the point of submission of a U.S. NDA, we find this valuation illogical and inadequate. If Viprinex�s clinical trials are successful, we believe an eventual market capitalization for the Company that is a multiple of the current level is reasonable. In the interim, we expect the stock to respond favorably as clinical trial results are made public; the first interim results are expected to become available in the third quarter of 2008. About Dutton Associates Dutton Associates is one of the largest independent investment research firms in the U.S. Its 30 senior analysts are primarily CFAs, and have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors. The cost of enrollment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $87,500 from the Company for 14 Research Reports with coverage commencing on 5/13/02. The Firm does not accept any equity compensation. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.