MiddleBrook has entered into a definitive securities purchase agreement with Equity Group Investments (EGI) for the sale of 30.30 million shares of its common stock at $3.30 per share and a five-year warrant to purchase a total of 12.12 million shares of common stock at an exercise price of $3.90 per share.
Proceeds from the transaction will allow MiddleBrook to move forward with the commercial launch of its once-daily Moxatag product, and to continue the development of its clinical pipeline.
In connection with the transaction, MiddleBrook has agreed to repurchase its Keflex assets previously sold to funds affiliated with Deerfield Management in November 2007, contemporaneously with the closing of the transaction. The company will reacquire the Keflex assets as well as its ongoing royalty obligations to Deerfield for approximately $11 million.
Additionally, as a result of the EGI transaction, MiddleBrook will redeem the three million warrants issued to Deerfield in conjunction with the Keflex asset sale for a total of $8.8 million. The transaction is subject to approval by MiddleBrook’s common stockholders, and other customary closing conditions, and is expected to close in 60 to 90 days.
As part of the agreement, a new, commercially focused senior management team will be appointed. Edward Rudnic will step down from his current position as MiddleBrook’s president and CEO and will be replaced by John Thievon, effective upon the closing of the transaction.
In addition, David Becker has been appointed as MiddleBrook executive vice president of finance and CFO, replacing Robert Low as MiddleBrook’s principal financial officer, also effective upon the transaction closing. Mr Becker will be responsible for all of MiddleBrook’s finance and operating activities. Dr Rudnic and Mr Low will continue to serve as consultants to the company following the closing.