ST. LOUIS, Dec. 1, 2011 /PRNewswire/ -- Stereotaxis, Inc. (NASDAQ: STXS) today reported that the Company has entered into a $20 million royalty financing agreement with Cowen Healthcare Royalty Partners II, L.P. ("Cowen Royalty"). The Company will receive $15 million upon satisfaction of closing conditions on or prior to December 5, 2011 and may receive up to an additional $5 million based on the achievement of certain milestones related to sales of the Stereotaxis robotic navigation system in 2012.
The agreement creates a loan obligation that will be repaid through, and secured by, royalties payable to Stereotaxis under its Development Alliance and Supply Agreement with Biosense Webster, Inc. (the "Biosense Agreement"). The Biosense Agreement relates to the development and distribution of magnetically enabled catheters used with Stereotaxis' Niobe® robotic system in cardiac ablation procedures. Biosense Webster's Celsius® RMT and NaviStar® RMT families of catheters, including the industry leading Celsius® and NaviStar® RMT ThermoCool® catheters, are the only magnetic catheters accurately matched to the navigational software of the Niobe® system for optimal performance and highly precise catheter manipulation.
Under the terms of the agreement, Cowen Royalty will be entitled to receive 100% of all royalties due to Stereotaxis under the Biosense Agreement until the loan is repaid. The full recourse loan matures on December 31, 2018 and bears interest at an annual rate of 16 percent, payable quarterly with royalties received under the Biosense Agreement. After the loan obligation is repaid, royalties under the Biosense Agreement will again be paid to Stereotaxis.
"We are taking the necessary actions that will provide us with the financial resources to help capitalize on our growth opportunities represented by our Epoch™ robotic navigation platform and Odyssey™ portfolio of products," said Michael P. Kaminski, President and Chief Executive Officer of Stereotaxis. "This transaction is consistent with our strategy of generating non-equity financing, while minimizing dilution. With the net proceeds from this financing, together with our ongoing operating expense reduction initiatives, we are strengthening the business and enabling the execution of our operating plan.""The number of catheter ablation procedures performed worldwide continues to grow as physicians look for a more permanent solution to treat complex cardiac arrhythmias," commented Gregory B. Brown, M.D., Managing Director, Cowen Royalty. "We expect the strong relationship between Stereotaxis and Biosense Webster to continue to expand the use of its Niobe® robotic system and better position Stereotaxis to capitalize on this multi-billion dollar opportunity." In conjunction with the Cowen Royalty financing agreement, the Company entered into the Second Amended and Restated Loan and Security Agreement with Silicon Valley Bank and satisfied its obligation to raise additional capital by November 30, 2011 thereunder. About Cowen Healthcare Royalty Partners