Gliatech
This article was originally published in The Gray Sheet
Executive Summary
Anti-adhesion gel maker raises $15-30 mil. in a staged equity financing from Paul Capital Partners. The funds include an up-front payment of $5 mil. to be used for preparing a submission to FDA for commercial re-launch of Adcon-L anti-adhesive gel in the U.S. The company discontinued distribution of the product, approved in June 1998 to inhibit scarring following lumbar surgery, in January 2001 following a recall initiated by the product's supplier (1"The Gray Sheet" Jan. 15, 2001, p. 23). An additional $2.5 mil. will be placed following the re-launch of the product outside the U.S., slated for June 2001. Another $7.5 mil. will be paid following the product's re-launch in the U.S. The agreement includes an option for a further investment of $15 mil. Under the terms of the deal, Paul Capital Partners will receive either roughly 2.5% of net sales of the Adcon product line, or minimum annual royalty payments beginning in 2003 at a rate of $1.6 mil. a year, depending on which amount is greater. The initial $5 mil. cash infusion leaves Gliatech with about $13 mil. in cash and short-term investments. The firm reported no revenues in the first quarter (ended March 31) of 2001
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