Ann Arbor, MI-based startup Aastrom Biosciences (Nasdaq: ASTM) said today that it has completed a private placement deal with Eastern Capital Limited worth $40 million, the largest round of financing in the company’s history. Last month, Aastrom began a Phase 3 clinical study of ixmyelocel-T, the company’s multicell therapy for patients with critical limb ischemia (CLI) who have no other treatment options.
Under the terms of the deal, Aastrom issued approximately 12,300 shares of Series B convertible preferred stock to Eastern Capital at the price of $3,250 per share. The Series B stock is convertible into shares of Aastrom’s common stock after March 8, 2017 at the rate of 1,000 common shares for one preferred share. Eastern Capital will not take a board seat, but Aastrom’s CEO, Tim Mayleben, says that when it’s all said and done, Eastern Capital will own 20 to 25 percent of Aastrom’s shares.
“We’re excited,” Mayleben adds. “This has been a long time coming, and we’re happy to have such a great investor.”
Eastern Capital, a large institutional investor funded by the Dart family fortune, has a long history of successful biotech investing. Mayleben calls the deal with Eastern Capital transformative, not least because it represents a long-term commitment to Aastrom by a leading investor in the biotech and life sciences sectors. Dart, by the way, also has Michigan ties — it started as a small company in Mason, MI, but now operates globally.
Mayleben says the company will use the financing primarily on the research and development costs associated with the Phase 3 REVIVE-CLI trial. CLI is a severe form of cardiovascular disease in the legs in which blood vessels get so clogged up that doctors are forced to amputate. Aastrom’s approach involves withdrawing a patient’s bone marrow cells and incubating them using a proprietary process to spur growth of adult stem cells and promote healing. Those beefed up cells get re-injected into the patient, where they are supposed to foster the growth of new blood vessels to improve circulation.
“In our industry, it’s not so much about stocks and shareholders as it is hitting milestones,” Mayleben says. “From that perspective, we’re really solid.”
For more on Mayleben’s thoughts on the deal with Eastern Capital, click here to read a blog post he published earlier today.
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