Wednesday April 19, 4:28 pm ET
WARRINGTON, Pa., April 19, 2006 (PRIMEZONE) -- Discovery Laboratories, Inc. (NasdaqNM:DSCO - News), has entered into a new Committed Equity Financing Facility (CEFF) with Kingsbridge Capital Limited, a private investment group, in which Kingsbridge has committed to provide up to $50 million of capital to support Discovery Labs' future growth through the purchase of newly issued shares of its common stock. Upon effectiveness of the new CEFF, as described below, the Company's 2004 CEFF, which presently has capital of up to $47.6 million available, will automatically terminate.
Discovery Labs will determine the exact timing, pricing and amount of any CEFF financings, subject to certain conditions. The CEFF allows Discovery Labs to raise capital, at the time, price, and in amounts deemed suitable to the Company, during a three-year period once a related registration statement is filed by Discovery Labs and declared effective by the Securities and Exchange Commission.
John G. Cooper, Executive Vice President and Chief Financial Officer of Discovery Labs, commented, ``This new CEFF, coupled with our existing cash, should provide us with financial resources adequate to progress Surfaxin(r) through the final stages of the U.S. and European regulatory review and approval processes for our initial indication, Respiratory Distress Syndrome in premature infants. In addition, it will allow us to support our manufacturing and commercialization initiatives and our key SRT pipeline programs, Surfaxin for Bronchopulmonary Dysplasia and Aerosurf(tm).
This new CEFF provides potential advantages over our 2004 CEFF, including an adjusted minimum stock threshold price which gives us the ability, once effective, to access capital. In addition, the discounts to be applied to share price ranges have improved, financing tranches will be completed over an 8-day rather than 15-day period, and this new CEFF will be available into 2009 whereas the 2004 CEFF would have expired in October 2007. With this CEFF and our ability to access other traditional financing structures, we believe we are in a position to make strategic financing decisions in support of the Company's plans.``
Certain details of the new CEFF are as follows:
-- For a period of three years, Discovery can access up to $50 million dollars from Kingsbridge in exchange for newly-issued shares of Discovery's common stock. Discovery may access the capital after the SEC declares effective the registration statement to be filed by Discovery covering the resale of the shares of common stock issuable in connection with the CEFF and the shares of common stock underlying the warrant discussed below.
--Discovery may access capital under the CEFF in tranches of up to the lesser of $10 million or 2.5% of Discovery's market capitalization at the time of the draw down, subject to certain conditions. Each tranche will be issued and priced over an 8-day period. The minimum acceptable purchase price, before applicable discount described below, for any shares to be issued to Kingsbridge during the 8-day period is the higher of $2.00 or 85% of the volume weighted average price of Discovery's common stock the day before the commencement of each pricing period.
-- For each day during the trading period, if the minimums described above are met, Kingsbridge will purchase shares of common stock at the volume weighted average price less discounts ranging from 6% to 10%.
-- The agreement does not generally prohibit Discovery from conducting additional debt or equity financings, shelf offerings, secondary offerings or any other fixed future-priced securities.
-- Throughout the term of the agreement, Kingsbridge is restricted from engaging in any short sale of Discovery's common stock.
-- Discovery is not obligated to utilize any of the $50 million available under the CEFF. The CEFF agreement does not contain any restrictions on Discovery's operating activities, automatic pricing resets or minimum market volume restrictions.
-- In connection with the CEFF, Discovery issued a warrant to Kingsbridge to purchase up to 490,000 shares of common stock at an exercise price of $5.6186 per share, which represents a 30% premium over the average of the closing bid prices of Discovery's common stock for the 5 trading days preceding the signing of the agreement. The exercise term of the warrant is 5 years beginning with the 6-month anniversary of the closing date of the agreement. The warrant must be exercised for cash, except in limited circumstances. |
