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Complete Genomics Offers 4.5M Shares of Common Stock; Signs $20M Loan Agreement


By Julia Karow

This article was originally published May 12.

In an effort to shore up capital as it expands it human whole-genome sequencing service business, Complete Genomics is offering 4.5 million of its shares in a public offering.

The company also disclosed this month that it has signed a $20 million loan agreement that it will use in part to pay one of several previous loans.

Complete Genomics last week filed for a public offering of 4.5 million shares of its common stock, or up to 5.175 million shares if the underwriters exercise their over-allotment option. Jefferies & Company and UBS Investment Bank are joint book-running managers for the offering, and Baird as well as Cowen and Company are co-managers.

Separately, the company disclosed in filings with the Securities and Exchange Commission that on March 25 it inked a $20 million loan agreement with Oxford Finance.

It will use the loan in part to repay the outstanding $7.4 million balance on an $8 million loan that it signed Dec. 17, 2010, with Comerica Bank, and the remainder to fund working capital requirements.

Complete Genomics said that it used part of the Comerica loan to repay the remaining $4 million of an existing loan from Silicon Valley Bank, Leader Equity, and Oxford.

At the same time that it signed the loan agreement with Comerica, the company signed a $6 million loan agreement with Atel Ventures.

The company used the Atel loan for equipment purchases, and needs to repay it in 36 equal monthly payments of principal and interest. Atel received a warrant to purchase almost 50,000 shares of common stock at $7.224 per share, which expires 10 years after the issuance date.

Complete needs to repay the $20 million Oxford loan by October 2014 in 30 equal monthly payments of principal and interest, starting May 1, 2012. Prior to that, it only needs to make monthly payments equal to the accrued interest on the outstanding balance. Oxford received warrants to purchase about 160,000 share of common stock at the price of $7.495 per share, which expire seven years after the issuance date.

As of March 31, the company had $68.8 million in cash and cash equivalents. Complete said that it expects its cash use to increase "significantly" in the short term as it hires more staff, expands its sequencing and computing centers, and develops new sequencing technology. For example, it estimated that the cost of expanding its current sequencing and computing capacity will amount to approximately $20 million this year.

Complete Genomics' existing cash resources are "insufficient to satisfy our long-term liquidity requirements," according to the filing, so the firm will need to raise additional capital to fund its operations in 2012 and to expand its business to meet its long-term business objectives.

Additional financing, which it said is "not in place at this time," may come from the sale of securities in a public or private offering, from an additional credit facility, or from a strategic partnership coupled with an investment in the firm.

Have topics you'd like to see covered in In Sequence? Contact the editor at jkarow [at] genomeweb [.] com.

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