Net proceeds are expected to be $10 million.

GTC Biotherapeutics inked an agreement with partner LFB Biotechnologies for a $15 million financing through the issuance of convertible debt and warrants to purchase shares of GTCB common stock. The money will be used for GTC’s corporate purposes across all programs

The financing is scheduled for a stockholder vote and closing in mid-December. GTC expects net proceeds at closing after transaction costs and establishment of a restricted cash account to be approximately $10 million.

The convertible debt will be secured by a first lien on GTC’s intellectual property and a second lien on all of GTC’s other assets except for the restricted cash account for GE Capital. In addition, the debt will be secured by a grant of rights and licenses with respect to certain products.

LFB is GTC’s partner for a number of recombinant plasma protein and mAb development programs. “Our collaborative relationship with LFB is one of GTC’s most important strategic relationships as we navigate these difficult financial markets,” states Geoffrey F. Cox, Ph.D., GTC’s CEO and chairman of the board. “This financing will enable GTC to complete the significant regulatory and partnering milestones for ATryn® in the U.S. in the first quarter of 2009. In addition, we will continue to pursue our overall strategy of developing collaborative strategic partnerships across the full range of our development pipeline.”

ATryn, a recombinant human antithrombin, has been approved in Europe and has begun the review process in the U.S. under a BLA. In addition to ATryn, GTC is developing a portfolio of recombinant human plasma proteins with known therapeutic properties. These proteins include recombinant forms of human coagulation factors VIIa, VIII, and IX and alpha-1 antitrypsin. GTC also has a mAb portfolio that includes an antibody to CD20 and an antibody to CD137. GTC’s intellectual property includes a patent in the U.S. through 2021 for the production of any therapeutic protein in the milk of any transgenic mammal.

The convertible debt will mature on June 30, 2012, and will bear interest at an annual rate of 8%. The debt may be converted into GTC common stock at $0.31 per share at LFB’s discretion at any time after June 1, 2009. GTC has the right to redeem the debt on or before June 1, 2009.

GTC will also issue to LFB five-year warrants to purchase approximately 23.2 million shares of GTC common stock at $0.31 per share. If the debt is repaid in full, LFB will have the right to require GTC to redeem the warrants for an aggregate price of $1.5 million. As a condition of the financing, $4 million of the proceeds will be placed in a restricted cash account to secure GTC’s existing debt to GE Capital.

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