PDL BioPharma, Inc. (PDL) (NASDAQ: PDLI) announced today that it closed a financing transaction with Durata Therapeutics, Inc. (NASDAQ: DRTX), a pharmaceutical company focused on the development and commercialization of novel therapeutics for patients with infectious diseases and acute illnesses. Under the credit agreement, PDL will provide Durata with up to $70 million of debt financing with a five year term and will receive interest on the principal amount outstanding and a security interest in substantially all of Durata's assets.
Durata's lead product candidate, dalbavancin, is an intravenous antibiotic product candidate for the treatment of patients with acute bacterial skin and skin structure infections (ABSSSI), caused by Gram-positive bacteria, such as S. aureus, including methicillin-resistant and multi-drug resistant strains, and certain Streptococcal species. A second generation, semi-synthetic lipoglycopeptide designed for 30-minute intravenous dosing on days 1 and 8, dalbavancin is intended to facilitate the treatment of patients with ABSSSI in both the in-patient and out-patient settings, reducing the length of a patient's hospital stay or avoiding hospital admission altogether and, ultimately, lowering the overall cost of care for these patients.
On September 26, 2013, Durata announced that it had submitted a New Drug Application to the U.S Food and Drug Administration seeking approval for the marketing and sale of dalbavancin. The FDA has designated dalbavancin as a Qualified Infectious Disease Product (QIDP), a new initiative designed to increase the availability of any "new antibacterial or antifungal drug for human use intended to treat serious or life-threatening infections, including those caused by an antibacterial or antifungal resistant pathogen, including novel or emerging infectious pathogens…."
The total financing of up to $70 million was provided pursuant to a credit agreement that included an initial $25 million in cash funded to Durata on October 31, 2013, and provides up to $45 million in additional funds to Durata, with $15 million of funding upon U.S. regulatory approval of dalbavancin, and the remaining $30 million funded within nine months after regulatory approval of dalbavancin, at Durata's election.
"We are pleased to provide this non-dilutive financing to Durata. Based upon our extensive due diligence, we believe that dalbavancin will be a medically and commercially significant product," said John P. McLaughlin, president and chief executive officer of PDL. "This deal with Durata marks the fourth transaction we have closed in recent weeks and, in doing so, we believe that we are securing measurable value for PDL and our stockholders."
"We are very pleased to announce this debt financing with PDL, which we believe further validates the opportunity Durata has with dalbavancin. This structure provides Durata with operating capital now and the flexibility for future funding, without diluting our existing shareholders, something we find very valuable," said Paul R. Edick, chief executive officer of Durata. "With the strengthened balance sheet, we are able to enhance our existing pre-commercialization and planned launch activities," Mr. Edick continued.