By Angela McDaniels
Seattle, Jan. 6 - Favrille Inc. has secured a $20 million line of credit from General Electric Capital Corp. and Oxford Financial Corp., according to a company news release.
The financing will be used primarily to expand the company's facility to support commercial-scale manufacturing of FavId, Favrille's lead product candidate currently in a phase 3 clinical trial for the treatment of follicular B-cell non-Hodgkin's lymphoma.
"We believe that our traditional debt financing and landlord improvement allowances will enable us to complete a large-scale, patient-specific commercial manufacturing facility without utilizing any proceeds from equity offerings," chief financial officer and vice president of finance and administration Tamara A. Seymour said in a company news release.
The cost of the expansion is estimated at $24 million, of which the landlord will provide roughly $11 million in the form of a tenant improvement allowance, the company said.
Favrille will use $13 million of the line of credit to fund the additional capital expenditures. The remaining $7 million will be used for additional equipment, software and refinancing of existing debt, including repayment of a $3 million loan and security agreement with GE Technology Finance and Lighthouse Capital Partners.
To repay the $3 million loan, Favrille borrowed against the line of credit on Dec. 30 in the form of promissory notes, which have a fixed 10.9% interest rate and require monthly payments totaling $139,547, according to an 8-K report filed with the Securities and Exchange Commission.
The agreement governing the line of credit also contains provisions that the company will obtain at least $20 million in additional equity financing by March 31; will not sell its intellectual property to any third party, though it does retain the right to grant non-exclusive licenses, and will maintain a minimum of $15 million in cash.
In connection with the line of credit, Favrille issued General Electric Capital and Oxford Financial warrants to purchase up to 97,668 shares of Favrille's common stock at an exercise price of roughly $4.10 per share, according to the filing. The warrants are exercisable through Dec. 30, 2010.
Borrowings under the line of credit, which matures in December 2007, are to be secured by all assets of the company, excluding intellectual property, and repaid over 36 to 42 months.
Favrille is a biopharmaceutical company based in San Diego that researches, develops and commercializes targeted immunotherapies for the treatment of cancer and diseases of the immune system.
| Issuer: | Favrille Inc.
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| Issue: | Line of credit
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| Amount: | $20 million, including $3 million promissory notes at 10.9%
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| Lenders: | General Electric Capital Corp., Oxford Financial
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| Warrants: | For 97,668 shares
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| Warrant expiration: | Dec. 30, 2010
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| Warrant exercise price: | About $4.10
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| Announcement date: | Jan. 6
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| Stock price: | $3.82 at close Friday
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