June 27, 2017

Biostage announces $3.1M agreement with investor

Biostage CEO Jim McGorry (left) and Chief Medical Officer Saverio La Francesca.

Biostage, Inc. of Holliston has enough funding to get it through the end of 2018, following a stock purchase worth $3.1 million by one of its investors.

The company announced Tuesday it has entered a memorandum of understanding with Dallas investment firm First Pecos, LLC for the private placement of 9,700,000 shares of its stock, worth about $3.1 million in total. First Pecos will act as a backstopping party in two pro rata rights offerings Biostage might decide to go forward with over the next two years. Proceeds from those offerings could yield up to $14 million, according to Biostage.

Total proceeds will allow Biostage to advance a first-in-human clinical study for its Cellspan Esophageal Implants program, making Biostage a clinical-stage company. The money will help Biostage file its Investigational New Drug application with the U.S. Food and Drug Administration.

"This agreement also helps us remove a financial overhang and provides an opportunity for our shareholders to participate in future offerings while minimizing dilution," said Jim McGorry, CEO of Biostage. "This path forward will give the company a feasible financing plan into late 2018."

Pecos will receive board representation and nomination rights as a result of the agreement.

Biostage has been looking for ways to continue financing its operations, including selling to a larger biopharma firm. The company is facing a potential delisting on the NASDAQ index.

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