Biostage announces $3.1M agreement with investor
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Biostage CEO Jim McGorry (left) and Chief Medical Officer Saverio La Francesca.
Biostage, Inc. of Holliston has enough funding to get it through the end of 2018, following a stock purchase worth $3.1 million by one of its investors.
The company announced Tuesday it has entered a memorandum of understanding with Dallas investment firm First Pecos, LLC for the private placement of 9,700,000 shares of its stock, worth about $3.1 million in total. First Pecos will act as a backstopping party in two pro rata rights offerings Biostage might decide to go forward with over the next two years. Proceeds from those offerings could yield up to $14 million, according to Biostage.
Total proceeds will allow Biostage to advance a first-in-human clinical study for its Cellspan Esophageal Implants program, making Biostage a clinical-stage company. The money will help Biostage file its Investigational New Drug application with the U.S. Food and Drug Administration.
“This agreement also helps us remove a financial overhang and provides an opportunity for our shareholders to participate in future offerings while minimizing dilution,” said Jim McGorry, CEO of Biostage. “This path forward will give the company a feasible financing plan into late 2018.”
Pecos will receive board representation and nomination rights as a result of the agreement.
Biostage has been looking for ways to continue financing its operations, including selling to a larger biopharma firm. The company is facing a potential delisting on the NASDAQ index.
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