Hana Biosciences (HNAB) Announces $100M Preferred Private Placement
Hana Biosciences Inc., (OTCBB: HNAB) today announced that it has entered into an Investment Agreement with Warburg Pincus and Deerfield Management for the sale of up to $100 million in preferred stock. Warburg Pincus, the lead investor in the financing, is a new investor in Hana, and Deerfield is the company's largest existing shareholder prior to this financing. The sale of $40 million of preferred stock under the Investment Agreement closed today.
Hana intends to use the net proceeds from the financing to advance its clinical development and commercialization programs, including regulatory activities related to Marqibo's New Drug Application preparation and submission, and for general corporate purposes. In conjunction with the financing, the Company's Board of Directors will expand to nine members with Warburg Pincus having the right to designate five new members.
"We are pleased that Warburg Pincus and Deerfield have made such a significant investment in the Company and view it as further validation of the potential of Hana's pipeline of product candidates," said Steven R. Deitcher, M.D., President and Chief Executive Officer of Hana Biosciences.
Hana expects that the financing will provide the funds needed to develop Marqibo to approval and commercialization for relapsed/refractory adult ALL patients; to study Marqibo(R) in front-line adult ALL and lymphoma patients; and to unlock the full potential of menadione topical lotion, a first-in-class therapeutic targeted at the dose-limiting skin toxicities in cancer patients taking EGFR inhibitors.
Terms of the Financing
The Company has entered into an Investment Agreement for the sale of up to $100 million of Preferred Stock. On June 7, 2010, the investors purchased 400,000 shares of Series A-1 Preferred Stock, at a per share sale price of $100. In conjunction with the signing, the investors have the right to purchase up to $60 million of additional Preferred Stock under certain circumstances. Upon approval by the Company's stockholders to increase the Company's authorized outstanding shares of common stock, effect a reverse stock split, and other related matters within 6 months of the closing date (i) the conversion price for the Preferred Stock to be converted to common stock will be: $0.184 for the $40 million purchased by the investors today, $0.184 for the next $20 million that the investors have the right to purchase, and $0.276 for the additional $40 million of Preferred Stock that the investors may have the right to purchase under certain circumstances and (ii) the Preferred Stock would accrete at the rate of 9% per annum, among other provisions.
If the Company's stockholders do not approve the above stated items (i) the investors retain the right, but not the obligation, to purchase up to an additional $60 million of Preferred Stock under certain circumstances; (ii) the effective conversion price would remain at its currently established level of $0.1288, for the $40 million purchased by the investors today, $0.1288 for the next $60 million that the investors have the right to purchase under certain circumstances; (iii) the accretion rate would be 12% increasing annually by 0.50%, and the Preferred Stock would retain a liquidation preference equal to at least 2.5 times its accreted value, among other provisions.
The investors are subject to certain transfer and standstill restrictions. In addition, the investors have voting rights, liquidation preferences, change of control rights, participation rights, anti-dilution protection and redemption rights, among other rights. Upon completion of the closing of the first $40 million, and in accordance with the terms of the Investment Agreement, Michael Weiser and Lyn Wiesinger resigned as directors of Hana, and Jonathan Leff, Nishan de Silva and Andrew Ferrer, each designated by Warburg Pincus, were appointed to Hana's board of directors. Warburg also has the right to designate two additional directors to Hana's board.
Roth Capital Partners, LLC served as financial advisor to a special committee of Hana's board of directors and provided a fairness opinion in connection with the transaction.
Hana intends to use the net proceeds from the financing to advance its clinical development and commercialization programs, including regulatory activities related to Marqibo's New Drug Application preparation and submission, and for general corporate purposes. In conjunction with the financing, the Company's Board of Directors will expand to nine members with Warburg Pincus having the right to designate five new members.
"We are pleased that Warburg Pincus and Deerfield have made such a significant investment in the Company and view it as further validation of the potential of Hana's pipeline of product candidates," said Steven R. Deitcher, M.D., President and Chief Executive Officer of Hana Biosciences.
Hana expects that the financing will provide the funds needed to develop Marqibo to approval and commercialization for relapsed/refractory adult ALL patients; to study Marqibo(R) in front-line adult ALL and lymphoma patients; and to unlock the full potential of menadione topical lotion, a first-in-class therapeutic targeted at the dose-limiting skin toxicities in cancer patients taking EGFR inhibitors.
Terms of the Financing
The Company has entered into an Investment Agreement for the sale of up to $100 million of Preferred Stock. On June 7, 2010, the investors purchased 400,000 shares of Series A-1 Preferred Stock, at a per share sale price of $100. In conjunction with the signing, the investors have the right to purchase up to $60 million of additional Preferred Stock under certain circumstances. Upon approval by the Company's stockholders to increase the Company's authorized outstanding shares of common stock, effect a reverse stock split, and other related matters within 6 months of the closing date (i) the conversion price for the Preferred Stock to be converted to common stock will be: $0.184 for the $40 million purchased by the investors today, $0.184 for the next $20 million that the investors have the right to purchase, and $0.276 for the additional $40 million of Preferred Stock that the investors may have the right to purchase under certain circumstances and (ii) the Preferred Stock would accrete at the rate of 9% per annum, among other provisions.
If the Company's stockholders do not approve the above stated items (i) the investors retain the right, but not the obligation, to purchase up to an additional $60 million of Preferred Stock under certain circumstances; (ii) the effective conversion price would remain at its currently established level of $0.1288, for the $40 million purchased by the investors today, $0.1288 for the next $60 million that the investors have the right to purchase under certain circumstances; (iii) the accretion rate would be 12% increasing annually by 0.50%, and the Preferred Stock would retain a liquidation preference equal to at least 2.5 times its accreted value, among other provisions.
The investors are subject to certain transfer and standstill restrictions. In addition, the investors have voting rights, liquidation preferences, change of control rights, participation rights, anti-dilution protection and redemption rights, among other rights. Upon completion of the closing of the first $40 million, and in accordance with the terms of the Investment Agreement, Michael Weiser and Lyn Wiesinger resigned as directors of Hana, and Jonathan Leff, Nishan de Silva and Andrew Ferrer, each designated by Warburg Pincus, were appointed to Hana's board of directors. Warburg also has the right to designate two additional directors to Hana's board.
Roth Capital Partners, LLC served as financial advisor to a special committee of Hana's board of directors and provided a fairness opinion in connection with the transaction.
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