UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported): December 9, 2008
PEREGRINE PHARMACEUTICALS,
INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-17085
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95-3698422
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(State
of other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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14282
Franklin Avenue, Tustin, California 92780
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(Address
of Principal Executive Offices)
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Registrant’s
telephone number, including area code: (714)
508-6000
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Not
Applicable
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(Former
name or former address, if changed since last
report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2 below):
o
Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425).
o
Soliciting material pursuant to Rule 14A-12 under the Exchange Act (17
CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement.
Peregrine
Pharmaceuticals, Inc. (the “Company”) and its wholly owned subsidiary, Avid
Bioservices, Inc. (“Avid” and, collectively with the Company, the “Borrowers”),
entered into a term loan for funding of up to $10 million, as described below
under Item 2.03. The description of the term loan and related
transactions under Item 2.03 are incorporated into this item by
reference.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under
an Off Balance Sheet Arrangement of a Registrant.
On
December 9, 2008, the Borrowers entered into a term loan for funding up to $10
million with MidCap Financial LLC and BlueCrest Capital Finance, L.P.
(the “Lenders”). Proceeds from the term loan will be used to fund the
Borrowers’ ongoing working capital needs.
Pursuant
to the Loan and Security Agreement, dated as of December 9, 2008 between the
Borrowers and Lenders (“Loan Agreement”), the Lenders agreed to initially loan
the Borrowers $5 million upon the satisfaction of certain closing
conditions. The Loan Agreement includes an option, which expires June
30, 2009, for the Borrowers to receive an additional $5 million upon the
satisfaction of certain conditions, including generating cash flow from other
sources and achieving certain pre-determined clinical trial
end-points.
The
outstanding principal balance of the loan bears interest at an annual percentage
rate equal to the greater of the thirty (30) day LIBOR rate or three percent,
plus nine percent. The interest rate will be adjusted each month and
interest will be paid monthly. Beginning in July 2009, the
outstanding principal will be repaid in 30 equal monthly
installments. The final payment of all unpaid principal and accrued
interest is due December 9, 2011. The Borrowers’ obligations are
secured by substantially all of the Borrowers’ assets now owned or hereinafter
acquired, including intellectual property.
The Loan
Agreement permits the Borrowers to prepay the outstanding principal amount and
all accrued but unpaid interest and fees, subject to a prepayment
fee. The amount of the prepayment fee depends on when prepayment is
made. If prepayment is made on or prior to December 9, 2009, the
prepayment fee will be an amount determined by a formula that approximates the
present value of the interest payments the Lenders would have received through
the term of the loan if it had not been prepaid. If prepayment is
made after December 9, 2009 and on or before December 9, 2010, the prepayment
fee is equal to 5% of the outstanding principal at the time of
prepayment. If prepayment is made after December 9, 2010, the
prepayment fee is equal to 3% of the outstanding principal at the time of
prepayment.
The Loan
Agreement requires compliance with customary covenants and provides for
customary events of default. If a default occurs, the Lenders may
declare the amounts outstanding under the Loan Agreement immediately due and
payable. In addition, if our government contract with the Defense
Threat Reduction Agency is terminated while the loan is outstanding, we will be
required at all times thereafter to maintain cash and cash equivalents in
an amount of at least eighty percent (80%) of the then outstanding principal
balance of the loan in a restricted account over which we will not be permitted
to make withdrawals or otherwise exercise control.
In
connection with the Loan Agreement, the Company is obligated to pay a commitment
fee of $100,000, $50,000 of which was paid upon execution of the Loan Agreement,
with the remaining $50,000 due and payable upon the earlier of our receipt of
the second $5 million tranche or June 30, 2009. In addition, upon the
Company’s making of the loan repayment, the Company must pay a final payment fee
equal to three percent of the total amount funded under the Loan
Agreement.
In
connection with the Loan Agreement, the Company issued to the Lenders five-year
warrants (the “Warrants”) to purchase an aggregate of 1,692,047 shares of the
Company’s common stock at a per share price of $0.2955, which was the average
price per share of the Company’s common stock for the 20 business days
immediately prior to the issue date. If the additional $5 million is
loaned to the Borrowers, the Company will issue an additional warrant to
purchase an additional 1,692,047 shares at the same per share
price. The Warrants may be exercised on a cashless basis and contain
customary piggyback registration rights.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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PEREGRINE
PHARMACEUTICALS, INC.
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Date:
December 12, 2008
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By: /s/ Paul J.
Lytle
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Paul
J. Lytle
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Chief
Financial Officer
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