“We are excited to have received this capital from Perceptive Advisors, a prestigious and well-regarded healthcare investment firm.” said John Sperzel, Chembio’s chief executive officer. “This capital provides flexibility to grow our business as we advance toward our 2023 revenue target of $100 million. It materially strengthens our balance sheet while significantly limiting any dilution to our current shareholders.”
Proceeds from the term loan are expected to be used to fund Chembio’s pursuit of its three corporate priorities: 1) expanding commercialization, including broadening its product portfolio and its geographic reach; 2) advancing the research and development pipeline, including building-out its infectious disease product line and leveraging its platform technology to develop point-of-care companion diagnostic, biothreat, and neurological tests; and 3) preparing for additional growth, including consolidating and expanding its U.S. facilities and automating its U.S. manufacturing.
The loan has a four-year term, with no principal payments required during the initial three years. The loan bears interest at an annual rate of 8.75% plus the greater of one-month LIBOR and 2.5%. As part of the transaction, Chembio issued to Perceptive Advisors a seven-year warrant to purchase 550,000 shares of Chembio common stock at an exercise price of $5.22, which equals the 15-day volume weighted average price of the common stock as of the day prior to closing.
Craig-Hallum Capital Group acted as exclusive financial advisor to Chembio for the transaction.
Chembio is a point-of-care diagnostics company focused on detecting and diagnosing infectious diseases.