Waiting to hear from the FDA regarding Hemopure, Biopure Corp. is planning to raise gross proceeds of $13.4 million.
The company said in an 8-K filing with the SEC that it plans to sell up to about 5.5 million shares of Class A common stock at $2.42 apiece. For each five shares purchased, investors will receive one warrant to purchase one share of Class A common stock.
The warrants have an exercise price of $3.63 per share and have a five-year term. However, on Sept. 25, 2005, or beyond, Biopure can tell holders to exercise the warrants within the 20 days if the average of the daily volume-weighted average price per share of the common stock during 10 consecutive trading days reaches twice the exercise price of the warrants. Any warrants not exercised in those 20 days would be void.
The sale is being made pursuant to a 10-million-share shelf registration statement filed earlier this month. In its prospectus, the company said it would use any proceeds for general corporate purposes, including capital expenditures and to meet working capital needs. Biopure's stock (NASDAQ:BPUR) fell 58 cents Tuesday, or 19.1 percent, to close at $2.45.
Like many in the biotechnology industry, Biopure, of Cambridge, Mass., is having financial difficulty. It said in its prospectus that as of Jan. 31, it had $9.5 million in cash and cash equivalents - enough to fund operations through the beginning of April, given its current operating plan. That caused its auditors, Ernst & Young LLP, to label Biopure a "going concern." Biopure anticipates needing to raise $45.5 million to fund operations through January 2004.
Biopure has an equity line financing agreement with Societe Generale. However the line is unavailable as a requirement stipulates the company's stock be valued at at least $13. The agreement is set to expire in June.
The company posted a net loss of $45.8 million for the year ended Oct. 31, 2002.
The company's flagship product is Hemopure, a blood substitute made of hemoglobin extracted from bovine red blood cells and then purified, chemically crosslinked and formulated in 250 milliliters of a balanced salt solution. Hemopure's biologics license application for acute anemia in adult patients undergoing orthopedic surgery is on file with the FDA, which accepted it for review on Oct. 1. (See BioWorld Today, Aug. 2, 2002.)
The company is still seeking a marketing partner for the product. It was approved for use in South Africa in 2001, although sales have not been recorded yet. Sales are expected in fiscal 2003 and would be through an importer/distributor. If approved in the U.S., Biopure would look to expand its indications, it said, and plans to initiate preclinical and clinical trials this year to grow Hemopure beyond surgery. (See BioWorld Today, April 11, 2001.)
Oxyglobin, a similar product to Hemopure, gained approval for veterinary use in 1998. In fiscal 2002, Biopure received total revenues of $2 million, almost entirely from Oxyglobin sales. It saw $3.5 million in fiscal 2001, and attributed the decrease in 2002 Oxyglobin sales to an insufficient supply of inventory resulting from the expansion and revalidation of its manufacturing facilities. Biopure said in its prospectus it has backorders of 9,000 units, or about $1 million, as of Oct. 31. It said it expects to fill those orders following regulatory clearance to ship product manufactured at the revalidated facilities.