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Aastrom Shares Get Jolt from Cash Infusion (ASTM)

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…

By Paul Ausick
Published March 9, 2012, 12:30pm ET · 1 min read

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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.

Contact [email protected] for any questions or corrections.

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Paul Ausick

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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