A.P. Pharma (Nasdaq:APPA), a specialty pharmaceutical company, today announced it has entered into a definitive securities purchase agreement with certain existing accredited investors providing for a private placement of up to $13.1 million in two tranches, the first consisting of common stock and warrants with aggregate proceeds of approximately $8.1 million, and a second tranche of common stock with proceeds of approximately $5 million.
A.P. Pharma expects to complete the first tranche of the private placement on October 22, 2009, subject to the satisfaction of customary closing conditions. Pursuant to the terms of the securities purchase agreement, the Company will sell approximately 8.0 million shares of common stock at $0.88 per share, the closing price on the date of signing the securities purchase agreement, October 19, 2009. The purchasers of the common stock at the first closing will also receive warrants to purchase approximately 4.0 million shares of common stock, exercisable through January 7, 2015 for an exercise price of $0.88 per share. The purchasers will pay $0.125 per underlying share for the warrants at the first closing. The securities purchase agreement also provides, under certain conditions, for the purchasers in the first closing to have the right to purchase up to 5.2 million shares of common stock at $0.97 per share prior to May 14, 2010. At the closing of the first tranche, the purchasers will pay $0.125 per underlying share for the right to purchase shares in the second tranche.
A.P. Pharma plans to use the proceeds from the offering to support the Company’s operations and manufacturing, development and regulatory activities needed to gain approval for APF530, its lead product candidate. The U.S. Food and Drug Administration (FDA) is currently reviewing the Company’s New Drug Application (NDA) for APF530, and based on the Prescription Drug User Fee Act (PDUFA), has issued an action date of March 18, 2010. APF530 is being developed for the prevention of chemotherapy-induced nausea and vomiting (CINV) and is a long-acting formulation of granisetron utilizing the Company’s proprietary Biochronomer™ drug delivery system.