BOONTON, N.J., Sept. 26, 2012 /PRNewswire/ — Unigene Laboratories, Inc. (UGNE), today announced the Company has entered into a Forbearance Agreement and First Amendment to Amended and Restated Financing Agreement with affiliates of Victory Park Capital Advisors, LLC, dated September 21, 2012, whereby Victory Park Capital has loaned the Company $4 million and agreed to forbear from exercising certain rights due to designated events of default through September 21, 2013, subject to the terms and conditions of such agreement.
Ashleigh Palmer, Unigene’s Chief Executive Officer, stated, “While the recent unexpected European Medicines Agency recommendation involving calcitonin and other events have seriously challenged the Company’s turnaround, today’s announcement clearly demonstrates that Victory Park Capital has not lost sight of Unigene’s potential. In particular, we believe that the Company’s proprietary Peptelligence technology, know-how and expertise represents the most clinically advanced and validated oral peptide drug delivery platform in the industry today.”
“Following today’s announcement, Unigene now has sufficient cash runway to maintain operations beyond the original VPC note maturity date and capitalize on potential value-building milestones realizable during the extended forbearance period. We continue to work on 14 feasibility studies that have the potential to convert into one or more revenue-generating licensing agreements. We now have the funds available to complete the toxicology program for UGP281, our lead proprietary anorexigenic peptide for the treatment of obesity, and subsequently prepare and file an Investigational New Drug Application with the FDA next year. This would allow the Company to begin human clinical testing in the event it is able to get additional funding. Additionally, Unigene is working diligently with Nordic Bioscience to advance UGP302 into human clinical testing as a treatment for Type 2 diabetes, and continues the active pursuit of partnering and funding opportunities for the advanced clinical development and commercialization of its Phase 2 oral PTH analog program.”
Under the terms of the Forbearance Agreement and First Amendment to Amended and Restated Financing Agreement, Unigene has issued to an affiliate of Victory Park Capital Advisors, LLC a one-year senior secured convertible note in the aggregate principal amount of $4 million, which bears interest at a rate per annum equal to the greater of the prime rate plus 5% or 15%. Of the $4 million, $500,000 has been deposited with Victory Park Capital to cover certain of Victory Park Capital’s fees and expenses, including those fees related to the transaction. The remaining $3.5 million will be used by Unigene to finance operations.
The agreement allows for the $4 million of new debt to convert into shares of the Company’s common stock based on a conversion rate of $0.05 per share, while the existing debt that had a conversion rate of $0.70 per share has been re-issued and now converts into shares of the Company’s common stock based on a conversion rate of $0.15 per share. As the Company lacks sufficient shares of common stock to deliver all of the conversion shares, the Company is required to obtain stockholder approval to increase the number of authorized shares to allow for the conversion of the debt in full. The agreement amended certain default provisions under the Amended and Restated Financing Agreement to include new events of default, including a default in the event that a required quarterly reconciliation shows a negative variance of 10% or more of actual cash revenue minus actual cash expenses for an applicable quarter versus the applicable quarterly cash flow forecast required to be delivered by the Company (as described more fully in the agreement), failure to maintain a cash balance in a specified account of at least $250,000, and a breach of any agreement or covenant contained in the agreement.
Pursuant to the terms of the Forbearance Agreement and First Amendment to Amended and Restated Financing Agreement, the Company has approved and authorized key employee retention grants and executive team restructuring grants, as well as employee and director retention grants. The Company has also entered into various ancillary agreements in relation to the transaction. The summary contained in this press release does not purport to be complete. Further details related to the Forbearance Agreement and First Amendment to Amended and Restated Financing Agreement and ancillary agreements, along with full copies of such agreements, can be found in the Current Report on Form 8-K filed by the Company with the United States Securities and Exchange Commission (SEC) on September 26, 2012.
Conference Call and Webcast
Interested participants and investors may access the conference call on September 27, 2012 at 11 a.m. ET by dialing 800-599-9816 (U.S./Canada) or 617-847-8705 (international); participant code 93577825. An audio webcast can be accessed by logging on to the Investors and Media section under the Events tab of the Unigene web site, http://www.unigene.com.
A telephonic replay of the call will be available for two weeks beginning at 1 p.m. ET on September 27, 2012. Access numbers for this replay are 888-286-8010 (U.S./Canada) and 617-801-6888 (international); participant code 66196433. The webcast replay will remain available in the Investors section of the Unigene Laboratories web site for 30 days.
About Unigene Laboratories, Inc.
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Unigene to Target Partnering and Therapeutic Development Opportunities Following Victory Park Capital Debt Financing …