A private offering by The Immune Response Corp. of stock plus warrants garnered $8.4 million and could pull down another $29.4 million if all warrants callable by the company at certain thresholds are exercised.
Carlsbad, Calif.-based Immune Response said it would use the proceeds from the offering - the start of which was disclosed last month in its quarterly report for the period ending Sept. 30 - for general corporate purposes and to repay debt to Transamerica Technology Finance Corp., of Rosemont, Ill.
Kathy Lane, spokeswoman for the company, said it was in a quiet period as required by SEC rules. Immune Response's quarterly filing for the period ended Sept. 30 reported the amount owed to Transamerica was about $1.2 million.
The debt was restructured in June 2002. Specifically, Immune Response cured the existing default under those loans and limited the circumstances that could serve as the basis for any future default. By way of agreements signed with Transamerica, Immune Response must pay three $200,000 milestone payments upon receipt of proceeds from the closing of the current private offering, exercise of the Class A warrants and exercise of the Class B warrants involved.
One payment would take place after each of the three events and each would reduce the debt to Transamerica, which also has been granted a security interest in Immune Response's assets.
Immune Response's third-quarter report also said the company might be facing bankruptcy soon. In September, it said it was reducing staff in an effort to cut costs by $1.8 million per quarter and also narrow its focus to its most advanced product, the HIV therapeutic vaccine, Remune. Immune Response's stock fell 47 cents, or 42 percent, to close at 65 cents on the potential-bankruptcy news. (See BioWorld Today, Sept. 10, 2002.)
Immune Response's stock (NASDAQ:IMNR) fell 9 cents Tuesday to close at $1.14.
In the offering, the number of shares of common stock and number of Class A warrants and Class B warrants included in the units was based on a 20 percent discount to the average of the closing bid prices of Immune Response's common stock for the 10-day period prior to the closing of the offering, about 88 cents per share.
Units were comprised of one share of common stock and one Class A warrant, which is exercisable at a 50 percent premium to the original purchase price for an additional share of common stock and a Class B warrant. The Class B warrants are exercisable at a 100 percent premium to the original purchase price for one share of common stock.
The warrants will have a five-year term from their respective dates of issuance and may be redeemed by the company depending on the price performance of its common stock. Immune Response sold $8.4 million in units in the private offering, including $6.4 million of new investment and the conversion of $2 million in outstanding promissory notes.