Oxygen Biotherapeutics (NASDAQ:OXBT) plans to raise up to $7.5 million through a private placement with two unnamed institutional investors, financing that will be directed to the company’s drug pipeline that includes a clinical stage compound for treating traumatic brain injury.
Morrisville, North Carolina-based Oxygen focuses on therapies that enhance the delivery of oxygen to damaged tissue. Oxygen will use the proceeds from the stock offering for product development, chiefly Oxycyte, an experimental treatment for traumatic brain injury that is currently in phase 2 clinical trials. Michael Jebsen, Oxygen’s CFO and interim CEO, said in a statement that proceeds from the transaction along with recent efforts to cut its burn rate should support the company with enough cash to last through the end of 2012.
The deal is structured to fund Oxygen in two installments. The first calls for the investors to purchase $3.5 million on newly issued preferred stocks and warrants. This first installment is expected to close today. The second installment would come in approximately six months. At that time, the company may issue up to an additional $4 million in preferred stock and warrants. William Blair & Company is the placement agent on the transaction.
The funding follows a shakeup at Oxygen’s executive offices and board. Former Chairman and CEO Chris Stern’s positions at the company were terminated in August following an internal investigation that concluded Stern lied about his academic background and conducted undisclosed securities deals that he tried to cover up. Shortly afterward, two members of Oxygen’s board of directors resigned after shareholders withheld their votes for the two directors, essentially expressing a vote of no confidence.
Oxygen has already commercialized a cosmetic skin product. Besides Oxycyte, its pipeline includes Wundecyte, a wound treatment. The company is also developing its technology as a treatment for decompression sickness, R&D that is being funded by the U.S. Navy.
Photo from Flickr user stopnlook
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