Poniard Pharmaceuticals, Inc. (Nasdaq: PARD), a biopharmaceutical company focused on innovative oncology therapies, announced today that it has completed the voluntary prepayment of the $12.35 million aggregate principal, interest and fees due under its senior secured loan facility with GE Business Financial Services Inc. and Silicon Valley Bank. The Company announced on December 16, 2010 that it had provided notice of such payment to the lenders. The prepayment satisfies all financial obligations of the Company under the credit facility. As a result, the credit facility, including all restrictive and financial covenants set forth in the loan agreement, has been terminated and all security interests and other liens held by the lenders in the Company's property and assets have been released and discharged.
The Company also announced today that it has entered into a committed equity financing facility under which it may sell up to $10 million of its registered common stock to Small Cap Biotech Value, Ltd. over an approximately 18-month period. Poniard is not obligated to utilize any portion of the equity facility and remains free to enter into other financing transactions. Poniard will determine, at its sole discretion, the timing, dollar amount and floor price per share for any draw under the facility, subject to certain conditions. When and if Poniard elects to use the facility, the number and price of shares sold in each draw will be determined by a contractual formula, whereby the Company will issue shares to Small Cap Biotech at a pre-negotiated discount to the volume weighted average price of Poniard's common stock over a preceding period of trading days. Reedland Capital Partners, an Institutional Division of Financial West Group, Member FINRA/SIPC, acted as placement agent for the initial signing of the facility and will receive a fee for its services at the time of any draw under the facility.
In connection with the execution of the equity financing facility, Poniard will issue to Small Cap Biotech 221,218 shares of registered common stock as a commitment fee. The offer and sale of shares by Poniard under the equity facility have been registered pursuant to a shelf registration statement declared effective with the Securities and Exchange Commission on June 2, 2009. Poniard intends to use the net proceeds from any sale of shares under the facility for working capital and other general corporate purposes.
"Repayment of our secured credit facility removes significant restrictions on our cash and assets and gives Poniard additional flexibility for the completion of our review of strategic alternatives," said Ronald A. Martell, chief executive officer of Poniard Pharmaceuticals. "The new equity financing facility provides us with access to additional working capital to support our operations, while allowing for control over timing and dilution."
Immediately prior to entering into the new equity financing facility with Small Cap Biotech, the Company and Commerce Court Small Cap Value Fund, Ltd., by mutual agreement, terminated the equity financing facility between the Company and Commerce Court dated February 23, 2010. The Company completed a drawdown of 4,229,000 shares of its common stock under the Commerce Court facility on March 15, 2010, for which the Company received net proceeds of approximately $6.1 million.
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