ZymoGenetics secured a $100 million tranched funding from Deerfield Management. ZymoGenetics may draw funds any time over the next 18 months. The company will have five years to repay the commitment with interest.
“This transaction significantly increases our financial strength and provides capital that we’ll use to build our Recothrom® business including the potential development of Recothrom line-extension products,” states Bruce L.A. Carter, Ph.D., CEO. Recothrom, a recombinant thrombin product, was approved in the U.S. on January 17. It is indicated as an aid to hemostasis when standard surgical techniques are ineffective or impractical.
Deerfield received a $1 million transaction fee. Under the terms of the agreement, ZymoGenetics may draw up to $25 million at a time. Interest will accrue on drawn capital at a compounded rate of 4.9% and be due along with outstanding principal in June 2013.
Each tranche entitles Deerfield to a 2% royalty on Recothrom net sales. In addition, ZymoGenetics will issue 1.5 million warrants exercisable at $10.34 at the time of the first draw. Each subsequent draw will give Deerfield 1 million warrants exercisable at a 25% premium on the average price over the previous 15-day period. All warrants will have a six-year term.
“We believe that this transaction with Deerfield is structured to benefit our shareholders in several ways,” notes James Johnson, CFO. “ZymoGenetics gains access to a significant amount of capital at a competitive cost, there is flexibility in amount, timing, and duration of borrowings, and shareholder dilution is minimized.”