Inotek Pharmaceuticals Corp (NASDAQ:ITEK) is looking to boost its liquidity, but it has chosen not to sell equity directly. Instead, the company has chosen the route of selling convertible notes that will mature in five years. ITEK is seeking to raise $50 million in gross proceeds through the sale of convertible notes, but it could raise more than that considering that it has granted underwriters the option to purchase additional notes of up to $7.5 million.
Interest on the notes
Inotek Pharmaceuticals Corp (NASDAQ:ITEK) said that the convertible notes that it is offering will be general unsecured obligations when issued. But it will pay interest on the notes on semi-annual basis.
Inotek retains the rights to redeem or repurchase the notes before their due date, which is August 1, 2021. Holders of those notes will have the right to convert them to the company’s common stock shares. But conversion of the notes will dilute the stock of Inotek.
More details to come
Inotek Pharmaceuticals Corp (NASDAQ:ITEK) has not provided all the details regarding the convertible notes on offer. For instance, pricing details of the notes are still lacking. The company said that other terms relating to the notes such as interest rate and conversion rate will be determined at the time of pricing the notes.
Putting the money to use
Inotek intends to use the funds generated from the offering of the convertible notes to finance development of its pipeline products, particularly trabodenoson, which is being worked on as a therapy for intraocular pressure in combination with latanoprost.
If there are still some more funds left, Inotek will funnel them to general corporate purposes.
Partners in the offering
Inotek Pharmaceuticals Corp (NASDAQ:ITEK) is working with Cowen, Wood Capital Advisors and Perella Weinberg Partners to help with the notes offering as either financial advisors or book-running manager.
Inotek’s notes offering comes after the company recently announced that it had been granted a patent relating to combination treatment intraocular pressure in people afflicted by glaucoma. The management said that the patent has widened Inotek’s portfolio of intellectual assets.