$7M Loan Helps Keep GTC Alive | French company injects cash to keep research going in Framingham
GTC Biotheraputics of Framingham announced in September that due to operating losses the company only had enough cash flow to remain viable until the middle of the first quarter in 2010.
This week, however, CFO John Green said the company has received a $7 million loan from the company’s majority shareholder, a French biotechnology company named LFB, that will help the company survive as it seeks new partnerships and financing for the long-term.
“We’re certainly looking for partners and any ways to continue to bring in cash,” he said. “We know we need to refinance the company and bring in additional capital. We feel confident we’ll be successful in gaining additional investments.”
He’s confident because of what he calls the company’s unique position in holding patents for a niche medicine-development market.
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GTC Biotherapeutics specializes in transgenic animal technology. Basically that means the company breeds animals with a specifically targeted protein in their milk. When the protein is purified out from the milk the medicine is created. GTC was originally part of Cambridge-based Genzyme Corp., but it spun off as an independent firm in the early 1990s.
The company’s main product, ATryn, has already been approved by the U.S. Food and Drug Administration for marketing in the United States. The blood protein provides patients relief from a genetic disorder that can lead to excessive blood clotting.
In addition, the company has a handful of other products in the development stage that Green hopes will move into clinical trials with the FDA in the coming weeks and months. Those products are also protein-based medicines being developed to relieve blood disorders.
Green said product development has not been a problem for the company, having the financing to pay for it and expanding to commercialization has been.
He partly blames the overall slowdown in the economy.
“The economy has made it tough, particularly the inability to bring investors in,” he said.
The company’s latest earnings report filed with the U.S. Securities and Exchange Commission in September shows that its quarterly revenues dropped from $2.8 million to just $117,000. The company lost $9.5 million in that quarter.
LFB’s partnership with GTC stretches back to 2006, when the French company invested $25 million through stock purchases to help the company develop a variety of new products.
GTC and LFB are continuing to move those products toward international approval to market them, Green said.
LFB originally approached GTC because of patents GTC has in the U.S. market related to transgenic development of blood-related medications. LFB has continued to support the company, including most recently agreeing to finance the $7 million loan.
As GTC attempts to regain financial footing it is also being closely watched by Nasdaq, where the company is publicly traded.
To stay on the Nasdaq exchange, companies must maintain securities valued at or above $35 million. As of Feb. 24, GTC’s market capitalization was $26.7 million. In November, Nasdaq gave GTC an extension until March 16 to regain compliance of the standard.
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