Monday, November 3, 2008

GTC, French biotech in $15M convertible debt deal

By Mass High Tech Staff

Transgenic therapeutics company GTC Biotherapeutics Inc. and French firm LFB Biotechnologies, a wholly owned subsidiary of LFB S.A., have entered an agreement in which LFB will purchase $15 million worth of GTC common stock and convertible debt, subject to GTC shareholder approval. Closing of the transaction and shareholder voting will take place in December, and GTC said it expects about $10 million in net proceeds.

Under terms of the deal, LFB will have access to 23.2 million shares of GTC common stock at 31 cents per share on or after June 1, 2009, at which time the company may choose to transfer the convertible debt into GTC stock.

The convertible debt will be secured by a lien on GTC intellectual property, another lien on most of the company’s assets and a grant of certain GTC product rights and licenses.

LFB has worked with Framingham-based GTC (Nasdaq: GTCB) on a few occasions in developing recombinant plasma proteins and monoclonal antibodies.

In May, LFB agreed to provide additional funding to GTC in order to include GTC’s recombinant human alpha-1 antitrypsin program in the development of reccombinant plasma proteins and monoclonal antibodies.

In 2006. the two companies collaborated on a similar deal in which LFB agreed to buy $25 million of GTC common and convertible preferred shares and convertible debt. Under terms of that agreement, LFB Biotechnologies was responsible for clinical development and regulatory review of the first program of this collaboration, and would have exclusive commercial rights in Europe. GTC and LFB Biotechnologies holds co-exclusive rights in the rest of the world to the products developed through the collaboration.

GTC Biotherapeutics reported a net loss of $2.2 million on quarterly revenue of $9 million for the second quarter in 2008.