HOLLISTON, Mass.,
June 27, 2017
/PRNewswire/ -- Biostage, Inc. (Nasdaq:
BSTG), ("Biostage" or the "Company"), a biotechnology company
developing bioengineered organ implants to treat cancers and other
life-threatening conditions of the esophagus, bronchus and trachea,
announced today the entry into a binding Memorandum of
Understanding (the "MOU") with First Pecos, LLC ("Pecos") for the
private placement of 9,700,000 shares of the Company's common stock
at a purchase price of $0.315 per
share, being the closing price of the Company's common stock on the
trading day prior to the execution of the MOU, and warrants to
purchase 9,700,000 shares of the Company's common stock, for gross
proceeds of approximately $3.1
million. The Warrants will have an exercise price of
$0.315 per share. In addition, under
the terms of the MOU, Pecos has agreed to act as a backstopping
party with respect to two pro rata rights offerings that the
Company may elect to conduct within two years following the closing
of the private placement, for gross proceeds of up to $14.0 million.
Jim McGorry, CEO of Biostage stated, "We are
delighted with the opportunity to extend Biostage's horizon with a
key investment from a long-term strategic investor. This funding is
instrumental as it gives the Company a clear bridge to clinical
data. This agreement also helps us remove a financial overhang and
provides an opportunity for our shareholders to participate in
future offerings while minimizing dilution. This path forward will
give the Company a feasible financing plan into late
2018."
Saverio La Francesca, M.D., Biostage's President and Chief
Medical Officer, commented, "First Pecos has been a
Biostage investor for the past three years. Through many
interactions over the course of this period, I have been impressed
by their interest in and understanding of our technology, and
importantly, their belief in the potential Biostage has to provide
an important solution to the unserved patient population we are
aiming to address. Their long-term commitment to Biostage, by
helping us advance our technology to the clinic, is clearly
demonstrated by this MOU."
The proceeds of the private placement will be used toward
the advancement of the Company's development programs, including
the Cellspan™ Esophageal Implant, as well as the filing
of the Company's Investigational New Drug ("IND") application with
the U.S. Food and Drug Administration ("FDA") and the Company's
pivot to a clinical-stage company with the commencement of its
first-in-human clinical trials in the fourth quarter of
2017.
To the extent the transaction would result in Pecos and
its affiliates owning more than 19.9% of the Company's common stock
at the time of closing, they will instead receive shares of a new
class of convertible preferred stock, which will automatically
convert into shares of common stock upon approval of the Company's
stockholders. Such approval will be sought at the Company's next
annual meeting of stockholders. Until conversion, the convertible
preferred stock will have a cumulative annual dividend of 15%.
Similarly, to the extent exercise of the warrants would result in
Pecos and its affiliates owning more than 19.9% of the Company's
common stock at the time of exercise, the warrants will instead be
exercisable into shares of the new class of preferred
stock.
Biostage has agreed to grant board representation and
nomination rights to Pecos, which will be proportional (rounded up
or down to the nearest whole number) to the percentage of the
Company's common stock owned by Pecos and its
affiliates.
The private placement is conditioned on satisfaction of
customary closing conditions and on the Company terminating its
Shareholder Rights Plan, and must be consummated on or prior to
August 15, 2017. The definitive
agreements relating to the private placement will include customary
representations, warranties and covenants. The Company agreed to
file a resale registration statement promptly after the closing of
the private placement to register the resale of the shares of
common stock issuable in the private placement.
This press release shall not constitute an offer to sell
or the solicitation of an offer to buy, nor may there be any sale
of these securities in any state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state or
jurisdiction.
About Cellspan™ Esophageal
Implants
Cellspan Esophaeal Implants utilize the Company's
proprietary Cellframe technology and may offer improved outcomes
for patients by potentially simplifying surgical techniques to
reduce post-operative complications and improve quality of life, by
prompting regeneration of the patient's own esophagus. Cellspan
implants are intended to offer numerous advantages over standard
surgical resection including: eliminating the use of the stomach or
intestine to create a mock esophagus, reduced complications and
improved post-surgical morbidity.
About Biostage
Biostage is a biotechnology company developing
bioengineered organ implants based on the Company's new
Cellframe™ technology which combines a proprietary
biocompatible scaffold with a patient's own stem cells to create
Cellspan organ implants. Cellspan implants are being developed to
treat life-threatening conditions of the esophagus, bronchus or
trachea with the hope of dramatically improving the treatment
paradigm for patients. Based on its preclinical data, Biostage has
selected life-threatening conditions of the esophagus as the
initial clinical application of its technology.
Cellspan implants are currently being advanced and tested
in collaborative preclinical studies. Preclinical, large-animal
safety studies, conducted in compliance with the FDA Good
Laboratory Practice ("GLP") regulations, for the Company's Cellspan
Esophageal Implant product candidate are ongoing, in support of
Biostage's goal of filing an Investigational New Drug application
("IND") with the U.S. FDA in the third quarter of 2017. Upon IND
approval, the Company plans to initiate its first-in-human clinical
trials for its esophageal implant product candidate by the end of
2017.
For more information, please visit
www.biostage.com and connect with the Company
on Twitter and
LinkedIn.
Forward-Looking Statements:
Some of the statements in this press release are
"forward-looking" and are made pursuant to the safe harbor
provision of the Private Securities Litigation Reform Act of 1995.
These "forward-looking" statements in this press release include,
but are not limited to, statements relating to the private
placement, any rights offerings, development expectations and
regulatory approval of any of our products, including those
utilizing our Cellframe technology, by the U.S. Food and Drug
Administration, the European Medicines Agency or otherwise, which
closings, offerings, expectations or approvals may not be achieved
or obtained on a timely basis or at all; or success with respect to
any collaborations, clinical trials and other development and
commercialization efforts of our products, including those
utilizing our Cellframe technology, which such success may not be
achieved or obtained on a timely basis or at all. These statements
involve risks and uncertainties that may cause results to differ
materially from the statements set forth in this press release,
including, among other things, our ability to obtain and maintain
regulatory approval for our products and our ability to complete
the private placement on a timely basis or at all; plus other
factors described under the heading "Item 1A. Risk Factors" in our
Annual Report on Form 10-K for the fiscal year ended
December 31, 2016 or
described in our other public filings. Our results may also be
affected by factors of which we are not currently aware. The
forward-looking statements in this press release speak only as of
the date of this press release. Biostage expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to such statements to reflect any change in its
expectations with regard thereto or any changes in the events,
conditions or circumstances on which any such statement is
based.
Investor Relations Contacts:
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Tom McNaughton
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Jenene
Thomas
|
Chief Financial Officer
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Jenene Thomas
Communications LLC
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774-233-7321
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(908)
938-1475
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tmcnaughton@biostage.com
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jtc@jenenethomascommunications.com
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Media Contacts:
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David Schull or Maggie Beller
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Russo Partners LLC
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212-845-4271 or 646-942-5631
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Email: Maggie.beller@russopartnersllc.com
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SOURCE Biostage Inc.