Cleveland BioLabs has landed a $10 million loan from a technology finance company that will give the Buffalo life sciences firm enough cash to fund its operations into the second half of next year.
The loan from Hercules Technology Growth Capital will give Cleveland BioLabs the cash it needs to keep operating well into 2014 while it continues to pursue up to $50 million in funding from federal agencies to finance the final stages of development of its anti-radiation sickness drug.
Neil Lyons, Cleveland BioLabs’ chief financial officer, said the loan from Hercules, which specializes in providing debt financing to venture capital-backed companies in technology-related markets, will involve only “limited dilution” to the company’s shareholders. As part of the loan, Cleveland BioLabs agreed to issue Hercules 156,250 warrants to buy the company’s common stock at a price of $1.60 per share.
Cleveland BioLabs shares rose 3 cents in early trading today to $1.60.
The loan is split into two phases: $6 million that can be accessed immediately and another $4 million that would be made available it Cleveland BioLabs were to win the development contract it is seeking from the Biomedical Advanced Research and Development Authority for its anti-radiation sickness drug Entolimod.
Cleveland BioLabs executives believe that studies conducted so far have shown great promise for Entolimod as an anti-radiation sickness drug that company officials believe could be stockpiled by governments worldwide to protect citizens and soldiers in the event of a nuclear accident or a terrorist attack.
The tests that the company has conducted so far have shown encouraging results that a single dose of Entolimod, administered 25 hours after exposure, can greatly increase survival rates following a potentially lethal exposure to radiation. But further studies must be done before Cleveland BioLabs can start selling the drug, and those additional tests will take a considerable amount of both time and money.