Cleveland BioLabs raised $7 million in new cash – nearly enough to fund its operations through the end of the year – by selling additional shares of its common stock to a pair of institutional investors.
The stock sale sold new shares to the unidentified institutional investors at a price of $1.22 per share, which matched the Friday closing price of the Buffalo drug development company’s stock. The investors also received warrants that will allow them to purchase additional shares at a price equivalent to $2.44 per share, beginning six months after the deal closes and continuing through the following 12 months to 4½ years.
Cleveland BioLabs, which had more than $14 million in cash on its books at the end of September, has enough funding in place to continue operating through the end of June, company executives have said. The company, which has been burning through cash at a rate of about $1.3 million a month, obtained a loan for up to $10 million last fall from a technology finance company that further strengthened its funding position.
That funding is important because Cleveland BioLabs continues to lose money while it works to obtain the funding and the regulatory approvals it needs to bring the drugs it is developing to market, including a $4.1 million loss during the third quarter.
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.
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 Bio-Labs can start selling the drug, and those additional tests will take a considerable amount of both time and money. The company has been in talks with a federal agency about funding the final stages of development for the drug, but so far, those discussions have not yielded a financing agreement.