NEW YORK (GenomeWeb News) – Clinical Data today said that it has completed a $50 million convertible debt financing with New River Management V and another affiliate of Randal J. Kirk, chairman of Clinical Data's board of directors.
The Newton, Mass.-based firm, which makes pharmacogenetic tests and is developing therapeutics, said that the funds would be used primarily to support late-stage therapeutics development. It has two compounds in Phase III studies: vilazodone for treating depression, and Stedivaze, a cardiac stress agent.
Clinical Data intends to file a New Drug Application with the US Food and Drug Administration later this year for vilazodone.
The debt financing includes unregistered convertible notes payable eight years from the date of issuance, bearing interest at an annual rate of 9.72 percent. Clinical Data said that it may not prepay the notes for the first two years from the date of issuance without prior approval from the investors.
The outstanding principal balance of the notes may be converted into 6,110,600 shares of Clinical Data common stock at the option of the investors, at any time, at a price equal to the closing market price on Feb. 25, 2009, which was $8.12, plus $0.0625 per share, said the firm.
Investors in the debt financing also received two tranches of warrants with a term of five years. The first tranche of warrants grants investors the right to purchase 1,527,650 shares of Clinical Data common stock at $8.12 per share. The second tranche grants the right to purchase an additional 1,527,650 shares of Clinical Data common stock at $9.74 per share, a 20 percent premium to the firm's closing price yesterday.
Clinical Data also said that as part of its transformation to a biotech firm with late-stage therapeutics, it has been conducting a review of its assets. The firm said that it has identified opportunities to create further near-term value and cost savings by out-licensing or discontinuing the development of certain non-core programs.
"Significant progress has been made toward achieving this goal and the company expects to realize the value of some of these efforts over the next several quarters," the company said in a statement.