MENLO PARK, Calif.--(BUSINESS WIRE)--Depomed, Inc. (NASDAQ:DEPO - News) announced today that it has entered into an agreement with Oxford Finance Corporation and GE Healthcare Financial Services for a $15 million senior secured loan that will be funded in three tranches through September 30, 2008.
Carl A. Pelzel, president and chief executive officer of Depomed, noted, “We set out last fall to secure non-dilutive funding for our hot flash program. At that time we felt that we were entering a period of financial uncertainty in the US where it was highly likely that access to capital could become restricted. Since our stock price was depressed at the time we wanted to be sure that our negotiating position with potential partners and the need to progress clinical trials did not push us into selling equity. We consider this an insurance policy since we have the option, not the obligation, to draw down the last two tranches of the loan. Now that we have had a positive meeting with the FDA on the requirements for the Phase 3 program it makes sense to use these funds to move the program forward.”
Dr. Georg Yu, Depomed’s associate director of corporate development, added, “Because we started the process last year we were able to secure very favorable terms. We are pleased to have met the rigorous credit approval standards of two of the leading lenders in the industry.”
Under the agreement, Depomed has borrowed $3.8 million, and may borrow up to an additional $11.2 million on or before September 30, 2008. The two additional tranches are tied to clinical development and financial milestones. The loan is secured by a first priority security interest in all corporate assets, other than intellectual property. The loan will be repaid over 36 months on a straight amortization schedule. The interest rate on the first tranche, and the anticipated interest rate on any additional tranches, is 11.59%. No warrants to purchase Depomed equity securities were issued to the lenders.
About Depomed
Depomed, Inc. is a specialty pharmaceutical company with two approved products on the market and other product candidates in its pipeline. The company utilizes its proven, proprietary AcuForm™ drug delivery technology to improve existing oral medications, allowing for extended, controlled release of medications to the upper gastrointestinal tract. Benefits of AcuForm-enhanced pharmaceuticals include the convenience of once-daily administration, improved treatment tolerability and enhanced compliance and efficacy. Glumetza® (metformin hydrochloride extended release tablets) is approved for use in adults with type 2 diabetes. Proquin® XR (ciprofloxacin hydrochloride) extended release tablets are approved in the United States for the once-daily treatment of uncomplicated urinary tract infections and is marketed in the United States within the urology specialty by Watson Pharmaceuticals. Product candidate Gabapentin GR® is currently in clinical development for the treatment of neuropathic pain and for menopausal hot flashes. Additional information about Depomed may be found on its web site, www.depomedinc.com.
About Oxford Finance
Oxford Finance Corporation is a specialty financial services firm headquartered in Alexandria, Virginia with offices in Massachusetts and California. For two decades, Oxford’s management team has provided loans to pioneers in the life science industry, and today Oxford is the only financial institution dedicated exclusively to this field. Oxford has originated over $900 million in loans over the past few years, with lines of credit ranging from $500,000 to $30 million.
About GE Healthcare Financial Services
GE Healthcare Financial Services is the premier provider of capital, financial solutions, and related services for the global healthcare market. With approximately $21 billion in assets, GE Healthcare Financial Services offers a full range of financing capabilities from equipment leasing and real estate financing to working capital lending, vendor programs, and acquisition financing. With a dedicated focus and a deep knowledge of the healthcare industry, GE Healthcare Financial Services collaborates with customers to create tailored financial solutions that help them improve their productivity and profitability. For more information, visit www.gehealthcarefinance.com.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties. The inclusion of forward-looking statements, including those related to the commercialization of Glumetza(TM) should not be regarded as a representation that any of our plans will be achieved. Actual results may differ materially from those set forth in this release due to the risks and uncertainties inherent in our business, including, without limitation, risks and uncertainties related to: our research and development efforts, including pre-clinical and clinical testing; regulation by the FDA and other government agencies; the timing of regulatory applications and product launches; our ability to successfully commercialize our products; the success of our collaborative arrangements with development and commercialization partners; and other risks detailed in our filings with the Securities and Exchange Commission filings, including our most recent Annual Report on Form 10-K and Quarterly report on form 10Q. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to revise or update this release to reflect events or circumstances that occur after the date of this release.
Contact:
Depomed, Inc. Ina Cu, 650-462-5900
Source: Depomed, Inc.
