Under the financing, Panacea Biotec’s subsidiary has agreed to purchase approximately 3.73 million shares of PharmAthene common stock at a negotiated price of $3.50 per share, which represents a 90% premium above the closing price of PharmAthene’s common stock on September 29, 2008.
Upon the closing, Panacea Biotec’s subsidiary will also receive 12-month warrants to purchase up to approximately 2.75 million additional shares of PharmAthene common stock at an exercise price of $5.10 per share. The transaction is expected to close on or before October 20, 2008.
Under a related agreement, PharmAthene has the first right of negotiation for the US distribution of certain of Panacea Biotec’s biodefense products and may enter into discussions with Panacea Biotec regarding potential strategic collaborations that could include development and manufacturing by Panacea Biotec of certain PharmAthene biodefense products.
PharmAthene said that the investment will increase its ongoing product development activities, enhance working capital and provide new resources for corporate growth. Immediately after the closing Panacea Biotec, through its subsidiary, will own approximately 14.5% of PharmAthene’s issued and outstanding common stock and, with the warrant, will have the right to purchase up to an additional 2.75 million shares, subject to a stock ownership cap, following any warrant exercise, of 19.99% of PharmAthene’s issued and outstanding common stock.
During the next three years Panacea Biotec has agreed not to purchase additional shares of PharmAthene stock without the prior written consent of PharmAthene. Panacea Biotec’s subsidiary will be granted limited rights to participate in future private financings by PharmAthene to maintain its then current ownership level. In addition, PharmAthene will retain full rights to its proprietary information and technology and full management and operational control.