NEW YORK (GenomeWeb News) – Vermillion expects to raise $43 million in gross proceeds from a private placement of around 2.3 million shares with a group of unnamed investors.
The Fremont, Calif.-based molecular diagnostics firm is currently operating under Chapter 11 bankruptcy protection. It said that the private placement is subject to approval of Vermillion's reorganization plan by the US Bankruptcy Court in Delaware, and would take effect on or about Jan. 7, 2010, when a hearing on the reorganization plan is scheduled.
Under the terms of the agreement, made on Dec. 24 with the investors, Vermillion will receive the proceeds from the sale of approximately 2,328,000 shares of its common stock at a price of almost $18.50 per share, 90 percent of the company's average closing price for the five trading days ended Dec. 23.
Vermillion will use the funds to pay in part the distributions to be made under Vermillion's Chapter 11 reorganization plan; to pay its obligations under its debtor-in-possession financing agreement with Quest Diagnostics; and for working capital and other general purposes.
Also, last week Vermillion said in documents filed with the court that it ended November with almost $3.6 million in cash. The company began November with more than $3.8 million and spent $306,000 for the month. It posted no revenues.
Under the terms of its Chapter 11 filing, Vermillion is required to file monthly income statements with the court. Since receiving 510(k) clearance from the US Food and Drug Administration for its OVA1 ovarian cancer test in September, the company has seen its cash position increase from $64,213 in August.
In its filing last week, the firm reported a net loss for the month of $612, 788. It said total assets were $13.3 million, while total liabilities were $33.4 million at the end of November.
In early trade on the Pink Sheets, Vermillion's shares were up around 7 percent at $23.70.