Aastrom Biosciences Inc. (NASDAQ: ASTM) announced today a $40 million private placement of Series B convertible preferred stock with Eastern Capital Ltd. The company expects to receive net proceeds of about $38 million and plans to use the funds for general corporate purposes and to support “research and development expenses related to the pivotal Phase 3 REVIVE-CLI clinical trial with ixmyelocel-T initiated in February 2012.” The drug is being developed to treat critical limb ischemia and ischemic dilated cardiomyopathy.
Under the terms of the placement:
Aastrom issued approximately 12,300 shares of Series B convertible preferred stock to Eastern Capital at a price of $3,250 per share. The shares will accrue dividends at a rate of 11.5% per annum during the 5-year term. The Series B preferred stock is convertible into shares of the Company’s common stock only after March 8, 2017 at a rate of 1,000 common shares for one preferred share. There were no warrants issued in connection with the financing and Eastern Capital will not take a board seat.
The deal appears to be a good one for Aastrom and for its shareholders. The conversion price is near the company’s 52-week high of $3.47 and gives Aastrom time to complete its trials (and boost its stock price) before the conversion clause becomes effective.
Shares are currently up nearly 24% at $2.25 in a 52-week range of $1.75-$3.47.