Kosan Establishes $50 Million Committed Equity Financing Facility
Wednesday July 19, 4:59 pm ET
HAYWARD, Calif., July 19 /PRNewswire-FirstCall/ -- Kosan Biosciences Incorporated (Nasdaq: KOSN - News) has entered into a 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 during the next three years through the purchase of newly-issued shares of Kosan's common stock. Under the terms of the agreement, Kosan will determine, at its sole discretion, the exact timing and amount of any CEFF financings, subject to certain conditions. The CEFF enables Kosan to raise capital, as it chooses, to support the company's corporate, research and development activities.
"This financing facility offers Kosan the freedom to supplement our cash reserves in a controlled and predictable manner and at terms that we believe are favorable to the company and minimally dilutive to our shareholders," said Robert G. Johnson, Jr., M.D., Ph.D., Kosan's Chief Executive Officer. "Kosan today has four cancer compounds rapidly progressing in clinical development and an early-stage cancer pipeline that we intend to advance into the clinic. While the company is well-capitalized, we believe it is prudent to ensure that we will continue to have adequate resources to execute on our ambitious clinical and research programs in a focused and efficient manner."
Key provisions of the CEFF are as follows:
* For a period of three years, Kosan can access up to $50 million dollars from Kingsbridge in exchange for newly-issued shares of Kosan's common stock. Kosan may access the capital after the SEC declares effective the registration statement to be filed by Kosan 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.
* Kosan may access capital under the CEFF in tranches of up to the lesser of $10 million or 2% of Kosan's market capitalization at the time of the draw- down of the tranche, subject to certain conditions. Each tranche will be issued and priced over an eight-day pricing period. Kingsbridge will purchase shares of common stock pursuant to the CEFF at discounts ranging from 6% to 10% depending on the average market price of the common stock during the eight-day pricing period, provided that the minimum acceptable purchase price for any shares to be issued to Kingsbridge during the eight-day period is determined by the higher of $2.00 or 85% of Kosan's share price the day before the commencement of each draw down.
* Throughout the term of the agreement, Kingsbridge may not engage in any shorting transaction of Kosan's common stock.
* Kosan is not obligated to utilize any of the $50 million available under the CEFF and there are no minimum commitments or minimum use penalties. There are no restrictions on Kosan's operating activities, automatic pricing resets or minimum market volume restrictions.
* The agreement does not prohibit Kosan from conducting additional debt or equity financing, other than financings similar to the CEFF.
* In connection with the CEFF, Kosan issued a warrant to Kingsbridge to purchase up to 285,000 shares of common stock at an exercise price of $4.94 per share which represents a 30% premium over the average of the closing bid prices of Kosan's common stock during the five days preceding the signing of the agreement. The warrant will become exercisable after the six month anniversary of the date of the agreement. The warrant will remain exercisable, subject to certain exceptions, until five years after the date of the agreement.
The securities issuable in connection with the CEFF and upon the exercise of the warrant issued to Kingsbridge have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration under the Securities Act of 1933 and applicable state securities laws or available exemptions from registration requirements. Kosan has agreed to file a registration statement for the resale of the shares of common stock issuable in connection with the CEFF and the shares of common stock underlying the warrant within 60 days of the date of the agreement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state... |
