Genta Incorporated has entered into definitive agreements with institutional investors in a private placement to sell Senior Secured Convertible Notes for up to USD12.0 million in aggregate gross proceeds before fees and expenses.
The transaction is expected to close with initial gross proceeds of USD2.0 million on or about 30 March, 2012, subject to satisfaction of customary closing conditions. Proceeds of the financing will be used to initiate late-stage, randomised clinical trials with tesetaxel in two major oncology indications: gastric cancer and breast cancer. Tesetaxel is the leading oral taxane in clinical development.
"We greatly appreciate the investors’ continued interest and enthusiasm for the Company’s major initiatives," says Dr Raymond P Warrell, Jr, Genta’s Chief Executive Officer. "Gastric cancer and breast cancer are unmet global needs, and they remain the lead indications for registration of tesetaxel. We look forward to the announcement of the trial initiations along with key features of their design and objectives."
The USD12.0 million of Senior Secured Convertible Notes issued pursuant to this transaction have a 10-year term, bear an annual interest rate of 6%, payable semi-annually, and will be convertible into shares of Genta common stock at a conversion rate of 100,000 shares of common stock for every USD100.00 of principal that is converted. Certain provisions from prior transactions, including a requirement that the Company implement a reverse stock split and a conversion price reset of existing convertible notes following such reverse stock split, will be eliminated upon the closing of this transaction.
An initial tranche of USD2.0 million in gross proceeds from this transaction will be made immediately available to the Company. Additional funds of up to USD10.0 million may be received following the purchase of subsequent notes, at the investor’s discretion.
Additional terms of this transaction are disclosed on a Form 8-K filed by the Company.
