Company sells three-year convertible term promissory notes to Hercules
By Devika Patel
Knoxville, Tenn., June 30 - AcelRx Pharmaceuticals, Inc. plans a $20 million private placement of secured convertible term promissory notes with investors Hercules Technology II, LP and Hercules Technology Growth Capital, Inc., according to an 8-K filed Thursday with the Securities and Exchange Commission. The company settled the initial $10 million tranche on June 29.
The three-year notes will carry a coupon equal to the greater of 8.5% plus the positive difference between the prime rate and 5.25% and 8.5%.
If the company prepays the loan prior to maturity, it will pay Hercules a prepayment charge of 3% of the outstanding principal balance if the prepayment occurs prior to June 29, 2012, 2% of the outstanding principal balance if the prepayment occurs after June 29, 2012, but prior to June 29, 2013 and 1% of the outstanding principal balance if the prepayment occurs after June 29, 2013.
Also, the company may convert up to $3 million of principal installments into common shares.
In addition, the investors received warrants for 274,508 shares, which are each exercisable at $3.06 for seven years.
The strike price is a 32.15% discount to the June 28 closing share price of $4.51.
The second tranche may be drawn at any time prior to Dec. 16.
About $2.8 million of the proceeds were used to repay the company's obligations under its loan and security agreement with Pinnacle Ventures LLC. AcelRx expects to use the remainder of the proceeds for development activities and general corporate purposes.
Based in Redwood City, Calif., AcelRx is a specialty pharmaceutical company focused on the development and commercialization of therapies for the treatment of acute and breakthrough pain.
Issuer: | AcelRx Pharmaceuticals, Inc.
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Issue: | Secured convertible term promissory notes
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Amount: | $20 million
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Maturity: | Three years
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Coupon: | 8.5% or higher
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Call: | Yes
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Warrants: | For 274,508 shares
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Warrant expiration: | Seven years
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Warrant strike price: | $3.06
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Investors: | Hercules Technology II, LP and Hercules Technology Growth Capital, Inc.
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Settlement date: | June 29 (for $10 million)
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Stock symbol: | Nasdaq: ACRX
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Stock price: | $4.51 at close June 29
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Market capitalization: | $88.91 million
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