ZILA News Zila, Inc. Signs Agreements for $40 Million Private Placement
PHOENIX--(BUSINESS WIRE)--Zila, Inc. (NASDAQ GM: ZILA), announced the execution of definitive
agreements for a private placement of $40 million in common stock,
convertible debt instruments and warrants to selected accredited
investors. Existing Zila shareholders and their related funds will make
up more than 80% of the private placement. The proceeds of the private
placement will be used to complete an acquisition and to augment
existing working capital. When exercised, the warrants associated with
the Placement will generate an additional $23 million for the Company.
“This financing is a critical step toward
transforming Zila into the dominant company in the early detection of
oral cancer,” commented Douglas D. Burkett,
Ph.D., Chairman, Chief Executive Officer and President of Zila. “The
proceeds will enable us to complete our planned acquisition of a dental
products company on or about November 28th,
while providing us a strong balance sheet to complete the OraTest®
regulatory effort and grow our ViziLite® Plus
business. I am appreciative of the strong participation by many of our
existing institutional shareholders as well as the support of new
investors.”
The private placement has three components:
A. 9.1 million shares of common stock at a price of $1.75 per share
together with warrants to purchase approximately 4.37 million common
shares at a price of $2.21 per share beginning on May 10, 2007 through
November 9, 2011. The use of proceeds from this component is for working
capital and will become available following the close of the acquisition.
B. Approximately $12.1 million in short-term notes that convert into
shares of common stock at $1.75 per share upon the approval by
shareholders of additional authorized common shares. The short-term
notes initially include 1.03 million warrants to purchase common stock
and will provide an additional 3.1 million warrants to purchase common
stock upon shareholder approval. The warrants will entitle holders to
purchase common shares at a price of $2.21 per share beginning on May
10, 2007 through November 9, 2011. The proceeds from this component will
become available to close the acquisition.
C. $12 million in a 3-year senior secured convertible note, bearing
interest at a rate of 6% and convertible into shares of common stock at
a price of $2.20 per share together with warrants to purchase 1.91
million common shares at a price of $2.21 per share beginning on May 10,
2007 through November 9, 2011. Shareholder approval of additional
authorized shares shall be required for the common shares underlying the
senior secured convertible note and its associated warrants. The
proceeds from this component will become available to close the
acquisition.
The private placement is being made only to accredited investors in a
transaction exempt from the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act") pursuant to Section 4(2)
of the Securities Act and Regulation D promulgated thereunder. The
Company has agreed to file a registration statement under the Securities
Act registering the resale of the shares of common stock issued in the
private placement and issuable upon exercise or conversion of the other
securities in the private placement.
The securities sold in the financing have not been registered under the
Securities Act and may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements. This press release shall not constitute an offer to sell
or a solicitation of an offer to buy, nor shall there be any sale of
these securities in any state or jurisdiction in which such an offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or
jurisdiction.
Acquisition Target
The acquisition Target would provide Zila with a national sales and
marketing organization that has a small suite of proprietary,
high-margin dental products that would complement Zila's cancer
screening and detection products. The sales and marketing programs
currently conducted by the Target reflect the focused, hands-on approach
that is required to integrate ViziLite® Plus
into dental practices and to establish the test as the standard of care.
The Target generates approximately $35 million in annual revenue and is
profitable. The anticipated acquisition price is $34 million. There can
be no assurance that this potential acquisition will be completed.
About Oral Cancer
Oral cancer is among the most deadly cancer types in the U.S., largely
owing to the fact that roughly two-thirds of all oral cancers are
detected at advanced stage. There are some 30,000 new cases of oral
cancer each year, and 8,000 related deaths. When oral cancer is detected
early, survival rates are about 80%; detected late, the survival rate
falls to 20%. The American Dental Association says that while most cases
of oral cancer affect people who use tobacco and/or drink heavily, more
than a quarter of oral cancers occur in people who do not smoke and have
no other risk factors.
About Zila, Inc.
Zila, Inc., headquartered in Phoenix, is a leading cancer diagnostic
company initially focused on oral cancer:
Zila Pharmaceuticals is dedicated to establishing ViziLite®
Plus as the new standard of care for the early detection of oral
abnormalities that could lead to cancer.
Zila Biotechnology is focused on achieving regulatory approval for the
next generation oral cancer diagnostic, OraTest®,
followed by the development of additional applications of its cancer
detection technologies including products for the early detection of
cervical and esophageal cancer.
For more information about Zila, visit www.zila.com.
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. These forward-looking statements
are based largely on Zila's expectations or forecasts of future events,
can be affected by inaccurate assumptions and are subject to various
business risks and known and unknown uncertainties, a number of which
are beyond the Company's control. Therefore, actual results could differ
materially from the forward-looking statements contained herein. A wide
variety of factors could cause or contribute to such differences and
could adversely impact revenues, profitability, cash flows and capital
needs. There can be no assurance that the forward-looking statements
contained in this press release will, in fact, transpire or prove to be
accurate. For a more detailed description of these and other cautionary
factors that may affect Zila's future results, please refer to Zila's
Form 10-K for its fiscal year ended July 31, 2006.
