PLANTATION, Fla., April 5 /PRNewswire-FirstCall/ -- Viragen, Inc.
(Amex: VRA) today announced that it has entered into purchase agreements for
the issuance and sale of $20 million in convertible promissory notes and
common stock purchase warrants. The notes, which will be convertible at
market price upon their issuance, were placed with a group of new and
returning institutional investors. The $20 million purchase price for the
notes and warrants has been placed in escrow pending satisfaction of all
conditions precedent to closing, including receipt of stockholder approval for
the sale of the notes and warrants, as well as for a reverse split of
Viragen's common stock. The proceeds will be used to progress the research,
development, and commercialization of Viragen's portfolio of healthcare
products and technologies, including an allocation to fund clinical studies
for the purpose of seeking FDA approval for Multiferon(TM), its natural human
alpha interferon which is currently approved for sale in certain international
markets.
The Board of Directors has authorized the Company to call a Special
Meeting of Stockholders in order to solicit the required stockholder
approvals. The reverse stock split, which is expected to be at the rate of
1:10, would affect all shares of common stock outstanding, including those
underlying stock options and warrants, immediately prior to the effective time
of the reverse split. Viragen intends to disseminate a proxy statement for
use in connection with the Special Meeting of Stockholders following receipt
of regulatory clearance to do so. Closing of the sale of notes and warrants,
at which the notes and warrants will be issued and the purchase price
delivered to Viragen, is expected to take place shortly after stockholder
approval is obtained.
"This significant investment in Viragen would provide us with the
financial flexibility and strength necessary to support organizational growth
as we move forward with our mission to build stockholder value," stated
Viragen's Chairman, Mr. Carl N. Singer. "With this opportunity to add
stability to our balance sheet, we are recommending a reverse stock split
because we believe our stockholders would benefit from an improved capital
structure that should appeal to institutional fund managers, research analysts
and the professional investment community in general. With longer-term
secured funding, a capital restructuring and the advent of expected commercial
and scientific milestone achievements, we believe that the Company will be
better positioned to create stockholder value." After placement agent fees
and expenses, the Company expects to receive approximately $19 million in net
proceeds.
Viragen's President and CEO, Mr. Charles A. Rice, added, "It is our
immediate priority to enhance and broaden our international marketing
activities in order to increase sales of Multiferon as we develop a strategy
that targets its introduction into the United States. This funding would
allow us to move forward with these initiatives, as well as support our
important research projects."
The purchase agreements provide that Viragen pay interest on the escrowed
purchase price at the rate of 10% per annum until the date the stockholders
approve the sale of the notes and the reverse stock split, at which time, the
interest rate on the escrowed funds will be reduced to 7% per annum. The
notes will be convertible into shares of Viragen common stock at market price,
subject to adjustment depending upon the market price of Viragen common stock
following the reverse split. Warrant coverage will be provided at 120% of the
conversion price of the notes. The complete terms of the financing will be
detailed in a Current Report on Form 8-K to be filed with the SEC.
"With the proceeds of this transaction added to our current cash balance,
we will have approximately $27 million in working capital on hand," reported
Viragen's Chief Financial Officer, Mr. Dennis W. Healey. "It is gratifying
that we were able to obtain significant financing under such favorable terms
including the notes being convertible at market and the warrants having a
strike price above market. We believe that based on the positive developments
of the Company and our growth prospects, we have been able to structure a
transaction that is mutually beneficial to the Company and our investors."
About Viragen, Inc.:
Viragen is a biotechnology company specializing in the research,
development and commercialization of natural and recombinant protein-based
drugs designed to treat a broad range of viral and malignant diseases. These
protein-based drugs include natural human alpha interferon, monoclonal
antibodies, peptide drugs and therapeutic vaccines. Viragen's strategy also
includes the development of Avian Transgenic Technology for the large-scale,
cost-effective manufacturing of its portfolio of protein-based drugs, as well
as offering Contract Manufacturing for the biopharmaceutical industry.
Viragen is publicly traded on the American Stock Exchange (VRA).
Viragen's majority owned subsidiary, Viragen International, Inc., is publicly
traded on the Over-The-Counter Bulletin Board (VGNI). Viragen's key partners
and licensors include: Roslin Institute, Memorial Sloan-Kettering Cancer
Center, Cancer Research UK, University of Nottingham (U.K.), University of
Miami, America's Blood Centers and the German Red Cross.
Viragen, Inc. Corporate Contact:
Douglas Calder, Director of Communications
Phone: (954) 233-8746; Fax: (954) 233-1414
E-mail: dcalder@viragen.com
The foregoing press announcement contains forward-looking statements that
can be identified by such terminology such as "expect", "potential",
"suggests", "may", "will", "should", "could" or similar expressions. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results to be materially different
from any future results, performance or achievements expressed or implied by
such statements. In particular, management's expectations regarding future
research, development and/or commercial results could be affected by, among
other things, uncertainties relating to clinical trials and product
development; availability of future financing; unexpected regulatory delays or
government regulation generally; the Company's ability to obtain or maintain
patent and other proprietary intellectual property protection; and competition
in general. Forward-looking statements speak only as to the date they are
made. The Company does not undertake to update forward-looking statements to
reflect circumstances or events that occur after the date the forward-looking
statements are made.
SOURCE Viragen, Inc.
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Related links:
http://www.viragen.com
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CONTACT:
Douglas Calder, Director of Communications,
Viragen, +1-954-233-8746, or fax, +1-954-233-1414, or e-mail,
dcalder@viragen.com
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