Discovery Laboratories raises $60 million in equity financing

Under the terms of the committed equity financing facility (CEFF), Discovery Labs has access to up to $60 million from Kingsbridge in exchange for newly-issued shares of Discovery Labs’ common stock. The funds that can be raised under the CEFF will depend on the number of shares actually sold, which may not exceed a total of approximately 19.3 million shares.

Discovery Labs may access capital under the CEFF in tranches of up to the lesser of $10 million or 3% of Discovery Labs’ market capitalization at the time of the draw down of each tranche, subject to certain conditions. The shares covered by each tranche will be issued and priced over an eight-day period. Kingsbridge will purchase shares of common stock pursuant to the CEFF at discounts ranging from 6% to 12% depending on the volume-weighted average market price of the common stock. Throughout the term of the CEFF, Kingsbridge is restricted from engaging in any short selling of Discovery Labs’ common stock.

Discovery Labs is not obligated to use any of the $60 million available under the CEFF. The CEFF does not restrict Discovery Labs’ operating activities and does not prohibit Discovery Labs from entering into or completing debt or equity financings, other than those that would involve certain future-priced securities.

In connection with the CEFF, Discovery Labs issued a warrant to Kingsbridge to purchase up to 825,000 shares of common stock at an exercise price of $2.51 per share, which represents a 40% premium over the average of the closing prices of Discovery Labs’ common stock during the five trading days preceding the signing of the CEFF. The warrant will be exercisable beginning six months from the date of the agreement and will remain exercisable for five years.