Bay City Capital has agreed to lend $10 million to portfolio company VIA Pharmaceuticals Inc. (Nasdaq: VIAP). VIA already has borrowed the first $2 million tranche.
VIA Pharmaceuticals, Inc. (Nasdaq: VIAP), a biotechnology company focused on the development of compounds for the treatment of cardiovascular and metabolic disease, today announced it has entered into a $10.0 million secured note purchase agreement (together with certain ancillary agreements, the “Loan Agreement”) with Bay City Capital Fund IV, L.P. and one of its affiliates (collectively, “Lender”), the Company’s principal stockholder. The Company borrowed the first tranche of $2.0 million on March 12, 2009. Subject to Lender approval, the Company may borrow up to an additional $8.0 million pursuant to the terms of the Loan Agreement.
“This Loan Agreement reflects the continuing support and confidence of Bay City Capital in our lead program VIA-2291 for the treatment of cardiovascular disease caused by atherosclerosis, by targeting inflammation in the blood vessel wall, an underlying cause of atherosclerosis,” said Lawrence K. Cohen, Ph.D., Chief Executive Officer of VIA Pharmaceuticals. “We are excited about the potential of VIA-2291 which is being demonstrated in the data from our ongoing Phase 2 trials, and intend to pursue strategic opportunities to partner and collaborate with large biotechnology or pharmaceutical companies to further develop this exciting compound.”
The Loan Agreement provides for borrowings of up to $10.0 million, which bear interest at 15% per annum. Borrowings subsequent to the initial $2.0 million borrowing are at the discretion of the Lender. The Company’s obligations under the Loan Agreement are secured by a first priority lien on all of the Company’s assets. All outstanding principal and accrued interest are due on September 14, 2009, subject to certain repayment acceleration provisions set forth in the Loan Agreement, including, without limitation, upon completion of a financing with gross proceeds (as defined in the Loan Agreement) in excess of $20.0 million.
In connection with the loan, the Company granted the Lender warrants to purchase an aggregate of 83,333,333 shares of the Company’s common stock at $0.12 per share (the “Warrants”). The Warrants vest based on the amount of borrowings under the loan and the passage of time as set forth in the Loan Agreement. Based on the $2.0 million borrowing at closing, the Warrants are currently vested with respect to 8,333,333 shares and will vest with respect to an additional 8,333,333 shares 45 days after closing if certain conditions are met as provided for in the Loan Agreement. The Warrants will vest with respect to additional shares in connection with each subsequent borrowing in accordance with the terms of the Loan Agreement.
About VIA Pharmaceuticals, Inc.
VIA Pharmaceuticals, Inc. is a biotechnology company focused on the development of compounds for the treatment of cardiovascular and metabolic disease. VIA’s lead candidate, VIA-2291, targets a significant unmet medical need: reducing inflammation in the blood vessel wall, which is an underlying cause of atherosclerosis and its complications, including heart attack and stroke. In addition, VIA’s pipeline of drug candidates includes other compounds to address other underlying causes of cardiovascular disease: high cholesterol, diabetes and inflammation. For more information, visit: http://www.viapharmaceuticals.com.