A Diagnostics & Imaging Week
Zila (Phoenix), a cancer diagnostic company initially focused on oral cancer, reported the execution of definitive agreements for a private placement of $40 million in common stock, convertible debt instruments and warrants to selected accredited investors. Existing Zila shareholders and their related funds will make up more than 80% of the private placement, the company said. The proceeds will be used to complete an acquisition and to augment existing working capital. When exercised, the warrants associated with the placement will generate an additional $23 million for the company.
"This financing is a critical step toward transforming Zila into the dominant company in the early detection of oral cancer," said Douglas Burkett, PhD, chairman and president/CEO of Zila. "The proceeds will enable us to complete our planned acquisition of a dental products company on or about Nov. 28, while providing us a strong balance sheet to complete the OraTest regulatory effort and grow our ViziLite Plus business. I am appreciative of the strong participation by many of our existing institutional shareholders as well as the support of new investors."
The acquisition target would give Zila a national sales and marketing organization that has a small suite of high-margin dental products that would complement Zila's cancer screening and detection products. The target generates about $35 million in annual revenue and is profitable. Zila expects to acquire the company for $34 million.
In other financing news:
• Guardian Technologies (Herndon, Virginia) reported completing the first of two closings of a private placement of its securities under a securities purchase agreement with a group of investors. Investors have agreed to buy $5.1 million of securities, $2.6 million of which were purchased at the first closing and $2.6 of which will be purchased upon effectiveness of a registration statement to be filed by the company with regard to shares underlying the securities. Midtown Partners & Co. (New York) acted as the placement agent for the private placement.
At the first closing, Guardian issued an aggregate of $2.6 million in principal amount of Series A 10% senior convertible debentures due Nov. 7, 2008, and warrants to purchase 4.5 million shares of its common stock at an exercise price of $1.2 per share. The debentures are convertible into shares of Guardian common stock at any time at a conversion price of $1.2 per share. The debentures bear interest at 10% per annum due on the first day of each quarter or upon conversion or redemption of the debentures as to the principal amount so converted or redeemed.
Guardian develops imaging technologies for early detection of threats of diseases.