An equity offering disclosed Friday brought in some fresh funding for Transgenomic Inc.
The Omaha, Neb.-based company, which develops research tools and related consumable products for drug companies, is grossing a little more than $15 million. The private placement garnered commitments from a group of institutional investors to purchase 15 million common shares at $1.01 apiece. The transaction, which is expected to close by Oct. 31, also includes warrant coverage for 6 million more shares exercisable at $1.21.
Transgenomic said it would use its net proceeds of just above $13 million to repay about $9 million in fully convertible debt to Laurus Master Fund Ltd. in New York, and apply the remainder to general working capital needs in an effort to grow its service and instrument businesses.
"Our capital structure has been complex, to say the least," Michael Summers, Transgenomic's chief financial officer, told BioWorld Today. "The major impetus for this financing was the need for some capital to progress [our business segments], and to put that debt behind us and make our balance sheet a little cleaner and more transparent for those trying to watch us. It will eliminate all of our debt, which we think is important for a $30 million company in our space, and it will eliminate a significant amount of confusion with regard to the convertible features in that facility."
Transgenomic's BioSystems business segment sells products for genetic variation detection and single- and double-strand DNA/RNA analysis and purification. Its flagship instrument platform, called the WAVE System, has applicability to genetic research and molecular diagnostics, and about 1,250 have been installed worldwide. Recent publications authored by a range of users have been relevant to translational research into targeted therapies for oncology.
"Its forte is very high sensitivity mutation detection," said Robert Pogulis, Transgenomic's director of strategic planning. "It is both a substitute for and a complement to projects that might otherwise be tackled by a resequencing approach."
The company also pairs the WAVE System with an enzymatic mutation detection product called Surveyor Nuclease to give users alternative approaches to discovering mutations and analyzing genetic variations.
A related business that stems from such systems entails service, maintenance and customer support for that installed base. Summers said such operations generate about $15 million in annual recurring revenue for the company, representing about half its total revenue.
It also offers WAVE-based biomarker discovery and validation services in support of translational research, preclinical and clinical studies. "We see a lot of upside in that business," he added, "not only from a pharma perspective but also from a diagnostics perspective."
Profitability appears to be just down the road a bit for Transgenomic, which also operates a smaller nucleic acid business. Recent overall growth helped narrow its quarterly net loss to $1 million for the period ended June 30, which it ended with $1.7 million in reserve cash, cash equivalents and short-term investments. It had 34.2 million shares outstanding at the time.
The investment was led by Lehman Brothers Inc., of New York. It remains subject to shareholder approval and other customary conditions, and its exclusive placement agent was Oppenheimer & Co., also of New York.
On Friday, the company's stock (NASDAQ:TBIO) lost 4 cents to close at 99 cents.
Acusphere Raises $17.5M In Offering
Acusphere Inc. raised net proceeds of about $17.5 million through a public offering.
The Watertown, Mass.-based specialty pharmaceutical company sold about 3.6 million common shares at $5.25 apiece, a per-share price that reflected an 11.5 percent markdown from the previous day's $5.93 closing bid on the stock. On Friday, the shares (NASDAQ:ACUS) dropped 44 cents to $5.49.
For Acusphere, which is developing new drugs and reformulating existing products with its microparticle technology, the financing essentially covers its recently posted net loss of $16.4 million for the quarter ended June 30. The company had cash reserves of $60.2 million at that date, and about 17.8 million shares outstanding.
Its three initial product candidates are being developed for applications in cardiology, oncology and asthma.
Piper Jaffray & Co., of Minneapolis, is acting as the offering's sole manager.