WaferGen Biosystems said this week that it is planning a $30.4 million private placement financing of equity and debt in order to ramp up sales and marketing efforts for its SmartChip Real-Time PCR system and consumables.
The company has signed private placement agreements with Great Point Partners, Deerfield Management, and Merlin Nexus, as well as certain members of WaferGen's board and management, consisting of $15.2 million of non-voting convertible preferred stock and $15.2 million of non-voting convertible notes due November 2014.
The preferred stock is convertible into common stock at $.52 per share and has a coupon of 5 percent per year. The notes are convertible into non-voting convertible preferred stock, which may be convertible into common stock at $.57 per share and carry an interest rate of 5 percent annually.
Investors will also receive five-year warrants to buy about 56 million shares of common stock at an exercise price of $.62 per share.
In a statement, the company said that net proceeds will be used to expand the company's ability to market the SmartChip Real-Time PCR system and related products, which WaferGen launched last August (PCR Insider, 5/5/2010); and for working capital and general corporate purposes.
"The goal is to expand our commercial team," chairman and CEO Alnoor Shivji told PCR Insider this week. "Last year … we focused more on hiring field application scientists. This year we'll be focusing more on bringing in sales people, with the goal of having about 10 sales people at the end of the year."
Each salesperson, Shivji said, will have a sales quota of about $1 million annually as they attempt to place SmartChip instrument platforms with customers.
"That will grow over time as the systems get installed and there is more reliance on consumables, and at that point the quota will go up to about $1.5 million, on an annual basis," Shivji said.
The latest financing will also support continued operations and R&D, "but R&D will remain pretty steady," Shivji said. "Marketing is the main focus here."
Shivji also said that WaferGen plans to expand its sales force primarily in the US, Canada, and Europe; while expanding its distribution network in certain Eastern European countries where WaferGen does not have a direct sales presence.
"We believe the SmartChip System meets an important unmet need in the rapidly growing genomic tools marketplace," Scott Davidson, managing director of Great Point Partners, said in a statement.