Connective Therapeutics (CNCT) and Palladin Group, with the assistance of AFO Capital Advisors LLC, structured a financing deal that guarantees CNCT with access to a buyer for up to $25 million worth of CNCT stock. The agreement - termed a Structured Equity Line Flexible Financing Agreement, or "SELF" Financing - essentially gives the Palo Alto, Calif., company a "put" to sell up to $25 million to Palladin in tranches of $500,000-$2 million over the next three years, beginning in the fourth quarter of 1997. Palladin gets a 7 percent discount to the average trading price, and received a five-year warrant to purchase 250,000 shares as a commitment fee.

One obvious benefit: The deal takes much of the guess work out of when to sell equity. "Every biotech company would like to do a follow-on offering," said Amy Factor, president of AFO Capital who advised. "But it's a question of where their stock price is