MORRISVILLE, N.C. — BioDelivery Sciences International is raising $7 million in cash through a stock conversion deal with Clinical Development Capital.

The biopharmaceutical firm (BDSI) and its investor (CDC) have agreed to convert a $7 million financial commitment to BDSI into stock at a price of $3.50 per share. That’s a 40 percent premium over the closing price of BDSI stock (Nasdaq: BDSI) on May `15.

BDSI has a proprietary means of delivering potent pain relievers under clinical trial. Its lead product is an oral patch designed to administer the narcotic fentanyl.

CDC had committed $7 million to BDSI for development of the pain relief system in July of 2005. BDSI was to repay CDC within 60 days of Food and Drug Administration approval for the product.

CDC also received warrants to purchase more than 900,000 additional shares of BDSI at a price of $3. It also will receive royalties on sales of the BDSI product.

“This is a significant and extremely favorable modification in the financial structure of our agreement with CDC for BDSI and our shareholders,” said BDSI Chief Executive Officer Mark Sirgo. “This transaction immediately and materially bolsters our cash and stockholders’ equity positions and removes from our future cash needs the obligation to pay back the $7 million provided by CDC to develop our lead product. The financial impact is a great benefit to us as we move forward with our clinical development and commercialization programs. However, of equal importance is that we believe this transaction represents another important validation by a sophisticated investor of our technologies, products, business plan and personnel.”