Fusion Capital Fund II LLC agreed to buy up to $12 million of MicroIslet Inc.'s common stock over a period of up to 30 months.
MicroIslet, a San Diego-based company established in 1998, develops technology for microencapsulating porcine islet cells for the treatment of insulin-dependent diabetes. The company's first product in diabetes, MicroIslet-P, is in small animal models.
As per the agreement with Chicago-based Fusion, MicroIslet has the right to control the timing and amount of stock sold with the purchase price based on the market at the time of the sale, William Kachioff, MicroIslet's vice president, finance and chief financial officer, told BioWorld Today.
MicroIslet has slightly more than 22.6 million outstanding shares and had about $814,000 in cash at the end of 2002.
Funds generated through the Fusion deal will be used for research and development and general working capital, including near-term efficacy data from the company's trials in animal models.
Haro Hartounian, MicroIslet's president, released a prepared statement saying, "This capital commitment demonstrates significant confidence in the future of MicroIslet, and its current management team. This financing gives us tremendous flexibility in expanding our preclinical programs. Further, we are excited about working with Fusion Capital, as we expect Fusion to be a valuable and long-term financial and business resource."
MicroIslet, the employer of 10 people, was founded on the science of Emanual Opara, of Duke University. The company's islet transplantation technology, exclusively licensed from Duke, includes methods for isolating, culturing, cryopreservation and immunoprotection (microencapsulation) of islet cells.
"We believe the encapsulation technology we've licensed from Duke may be applicable to other disease states, so we are considering partnering opportunities to expand the use of our technology, but the primary focus is definitely diabetes," Kachioff said.
Furthermore, the company has moved its research closer to San Diego through its new collaboration with The Scripps Research Institute.
Released last week, the agreement calls for MicroIslet and Scripps to conduct preclinical studies using MicroIslet's technologies. MicroIslet said completion of the work will set the stage for studies enabling an investigational new drug application and can be included as part of the IND process for human trials.
The research will be led by Daniel Salomon, associate professor at TSRI in the Department of Molecular and Experimental Medicine.