Vulcan gets warrants for 399,999 shares; Oxford grants four-year loan
By Angela McDaniels
Tacoma, Wash., Oct. 25 - Omeros Corp. received a $20 million investment from Vulcan Capital and will be lent up to $20 million by Oxford Finance Corp., according to an 8-K filing with the Securities and Exchange Commission.
On Oct. 21, Vulcan Capital received three five-year warrants with exercise prices of $20.00, $30.00 and $40.00 per share, respectively. Each warrant is exercisable for 133,333 shares.
The strike prices are premiums of 163.50%, 295.26% and 427.01%, respectively, to the $7.59 closing share price of the company's stock on Oct. 20.
The proceeds from the Vulcan Capital investment, along with a $5 million grant award from Washington state's Life Sciences Discovery Fund, will be used to support the advancement of the company's G protein-coupled receptor program.
Vulcan Capital and the Life Sciences Discovery Fund will receive a percentage of the net proceeds generated by the program. The blended percentage payable to Vulcan Capital and the fund is in the mid-teens with respect to the first approximately $1.5 billion of net proceeds and then 1% for net proceeds in excess of $1.5 billion.
The term of the agreement with Vulcan Capital is 35 years.
Gregory A. Demopulos, M.D., chairman and chief executive officer, said during a conference call held Monday that the arrangement with Vulcan and LSDF was "attractive," as it "provides non-dilutive capital" to the company, with the exclusion of the warrants.
Additionally, the agreements do not "preclude our ability to do any other deals around our GPCR program.
"The financial risk is being borne fully by Vulcan and LSDF," he added. "We have been working on this arrangement for quite awhile."
Oxford loan
Omeros received $10 million from Oxford Finance on Oct. 21 and has until March 31 to borrow an additional $10 million. The maturity date of the loan is Oct. 21, 2014.
Demopulos said the terms of the facility were "substantially better" than the previous facility.
Interest is Libor plus 855 basis points on the first tranche and Libor plus 825 bps for the second tranche.
Interest is payable monthly, and beginning Nov. 1, 2011, 36 payments of principal and interest are payable monthly.
Omeros made a one-time facility fee payment of $50,000 for the first tranche and will make a second $50,000 payment if it borrows the second tranche.
At maturity, the company must make a final payment fee of 5% of each tranche, provided that percentage for the second tranche will decrease by 0.2% for each month that lapses between the pricing date and the settlement date for the second tranche.
The loan is prepayable at any time subject to a 1% fee.
Demopulos said about $9.1 million of the $10 million was used to pay down the previous debt facility.
Omeros is a Seattle-based biopharmaceutical company focused on inflammation and disorders of the central nervous system.
Stephanie N. Rotondo contributed to this article
| Issuer: | Omeros Corp.
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| Issue: | Cash investment plus warrants; loan
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| Stock symbol: | Nasdaq: OMER
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| Stock price: | $7.30 at close Oct. 22
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| Market capitalization: | $168.89 million
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| Vulcan investment
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| Amount: | $20 million
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| Warrants: | For 399,999 shares
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| Warrant expiration: | Five years
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| Warrant strike prices: | $20.00 for 133,333 shares, $30.00 for 133,333 shares, $40.00 for 133,333 shares
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| Investor: | Vulcan Capital
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| Settlement date: | Oct. 21
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| Oxford loan
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| Amount: | Up to $20 million
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| Maturity: | Oct. 21, 2014
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| Coupon: | Libor plus 855 bps for $10 million; Libor plus 825 bps for $10 million
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| Call option: | At any time subject to 1% fee
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| Investor: | Oxford Finance Ltd.
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| Settlement date: | Oct 21 (for $10 million)
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