Shareholders of Vancouver-based Protox Therapeutics Inc. (TSX:PRX) have approved multi-stage financing that could see a global private equity firm become the company’s majority shareholder.
Under the deal with Warburg Pincus, a $30 billion global private equity firm, Protox will receive up to $35 million to fund further development of its treatment of benign prostatic hyperplasia.
The funds will consist of an initial tranche of $10 million followed by an additional tranche of $25 million, subject to the U.S. Food and Drug Administration granting a special protocol assessment (SPA) for the treatment, a necessary step for regulatory approval.
Warburg Pincus will invest its $35 million through a unit offering of $0.40 per unit, with each unit consisting of one share and 0.6 common share purchase warrant. The initial tranche will make the private equity firm the company’s largest shareholder, holding approximately 21% of Protox’s outstanding shares.
If Protox does not receive the SPA by September 30, 2011, Warburg Pincus will have the right to invest an additional $25 million, subject to certain conditions. This additional investment would make Warburg Pincus Protox’s majority shareholder, holding 59% of the company’s shares.
The first tranche of the investment is expected to close November 23, at which time Jim Miller, Alex Giaquinto, and Avtar Dhillon will resign from Protox’s board to be replaced by Warburg Pincus nominees Jonathan Leff, Nishan de Silva and Lars Ekman, who will become the new board chair. Former chair Frank Holler will remain on the board.
Protox’s share price range during the past week: between $0.55 and $0.59; 52-week high: $1.08; 52-week low: $0.35.