A.P. Pharma has entered into a definitive securities purchase agreement with existing investors for a private placement of up to USD13.1m in two tranches.
Participants in the transaction were Baker Brothers Investments, Tang Capital Partners, Tavistock Life Sciences and Deerfield Partners.
The first tranche will consist of common stock and warrants with aggregate proceeds of approximately USD8.1m, and the second tranche of common stock with proceeds of approximately USD5m.
A.P. Pharma expects to complete the first tranche of the private placement on 22 October 2009, subject to the satisfaction of customary closing conditions.
Pursuant to the terms of the securities purchase agreement, the company will sell approximately 8.0 million shares of common stock at USD0.88 per share, the closing price on the date of signing the securities purchase agreement, 19 October 2009.
The purchasers of the common stock at the first closing will also receive warrants to purchase approximately 4.0 million shares of common stock, exercisable through 7 January 2015 for an exercise price of USD0.88 per share.
The purchasers will pay USD0.125 per underlying share for the warrants at the first closing.
The securities purchase agreement also provides, under certain conditions, for the purchasers in the first closing to have the right to purchase up to 5.2 million shares of common stock at USD0.97 per share prior to 14 May 2010.
At the closing of the first tranche, the purchasers will pay USD0.125 per underlying share for the right to purchase shares in the second tranche.
A.P. Pharma plans to use the proceeds from the offering to support the company’s operations and manufacturing, development and regulatory activities needed to gain approval for APF530, its lead product candidate. The US Food and Drug Administration is currently reviewing the company’s new drug application for APF530, and based on the Prescription Drug User Fee Act has issued an action date of 18 March 2010.
APF530 is being developed for the prevention of chemotherapy-induced nausea and vomiting and is a long-acting formulation of granisetron using the company’s proprietary Biochronomer drug delivery system.
At the time of the first closing, the company amended its preferred shareholders rights agreement to permit an increase in the beneficial ownership of Tang Capital and Baker Brothers to 34 per cent and 30 per cent, respectively.
Upon the initial closing, Baker Brothers has the right to designate one new independent member to A.P. Pharma’s board of directors. Following the second closing, if Baker Brothers purchases its allocated shares in the second tranche, it will have the right to designate one additional member to the board of directors.
