Drug developer Cytori Therapeutics Inc., after incurring losses, has paid off debt with the help of a new $17.7 million loan.
San Diego-based Cytori is developing several therapies, including a potential treatment for impaired hand function caused by the rare autoimmune disease scleroderma. The company is also in trials for potential treatments for osteoarthritis, burns and cardiovascular disease.
The new, secured term loan accrues interest at the three-month Libor rate, plus 7.95 percent, according to documents filed with the U.S. Securities and Exchange Commission. Cytori will make interest-only payments through June 2016, and then make principal and interest payments until the loan matures on June 1, 2019. If the company receives positive data from a clinical trial, or closes a partnership or licensing agreement, it may be able to have the interest-only payments extended through June 2017. Oxford Finance LLC acts as collateral agent and lender. Other lenders also participated.
The company used the money, plus $7.5 million that it raised in a May equity offering, to pay Oxford and Silicon Valley Bank $25.4 million due on a loan from 2013. On May 5, Cytori agreed to sell up to $25 million worth of stock and warrants. The business closed on $19.4 million May 8, and expects to complete the transaction in August. The deal should give the company about 18 months with enough cash on hand, Cytori says in an SEC filing.
Cytori had $22 million in net losses for the three months ended March 31, up from that period the previous year, when it had $10.4 million in losses, according to an SEC filing. The business also has a $360 million deficit. Cytori brought in $902,000 in product revenues for the three months ended March 31.
The company's accountant raised substantial doubt about Cytori's ability to continue as a going concern, or without the threat of liquidation, because there is no guarantee the company will make enough money to become profitable, plus it needed additional cash to operate and pay debt. In part due to research and development costs, the company has nearly always operated at a loss.
Lorem Vascular Pte Ltd., which licenses Cytori's products, received clearance for the Cytori Cellution System from the State Food and Drug Administration of the People's Republic of China which means Lorem will be submitting a purchase order, according to Cytori.
For the previous edition of Turnaround Tuesday, see Z Trim Signs Food Biz Pro Anthony Saguto as CFO After Q1 Loss. For more struggling companies, check out Mergers & Acquisitions Distressed Company Watch List.
Editor's Note: Turnaround Tuesday and the Distressed Company Watch List will resume publishing on June 16.