Viragen Inc. received a potential $12 million addition to its bank account, courtesy of a credit agreement with its largest institutional investor.
Palisades Master Fund LP, an institutional investment fund based in the British Virgin Islands, agreed to provide up to that amount over the course of two years. Plantation, Fla.-based Viragen said it would outline more specific terms of the deal, structured as an equity line of credit, in a registration statement with the Securities and Exchange Commission.
Uses for the funding are left at Viragen's discretion, as is the timing it chooses to draw down the credit facility. The funding partially satisfies plans put in place last month by new management to reduce the company's burn rate by up to 40 percent and at the same time seek additional investments. To slow its cash consumption, Viragen laid off an undisclosed number of its 70 employees, and several on the management team and board members agreed to full or partial compensation in the form of stock options. As of Feb. 13, the company had about 147.6 million shares outstanding.
Viragen had been in serious need of funding - for the period ended Dec. 31, the company reported about $32,000 in cash and a six-month loss of about $7.1 million. In the last three fiscal years, Viragen has posted consecutive annual losses in excess of $11 million. (See BioWorld Today, March 5, 2003.)
But its financial picture brightened a bit in late January when the company raised $2.1 million through a private placement of convertible debentures.
Regulatory news also has been on the positive side for Multiferon, its product already approved in Sweden and seven small-market countries. Last month the natural human alpha interferon was approved in South Africa. Initial approval applications remain pending in five other small-market countries.
Sweden has granted the broadest approval to date, an indication for any disease in which a patient fails first-line recombinant interferon therapy. Elsewhere, Multiferon is approved as a second-line treatment for hairy-cell leukemia and chronic myelogenous leukemia. The company, which said it was focusing its efforts in markets that give it a chance to penetrate most quickly, has filed for a broader approval in those countries as well.
For the three months ended Dec. 31, sales of Multiferon totaled about $127,000.
Viragen also had been working to develop protein-based drug candidates that include monoclonal antibodies, peptide drugs and therapeutic vaccines. Its pipeline also includes four anticancer products in preclinical development.
The company continues to develop its avian transgenic technology, designed for large-scale manufacturing of its portfolio of protein-based drugs.
Viragen officials could not be reached for comment.
Viragen's stock (AMEX:VRA) closed unchanged Tuesday at 8 cents.