A new loan and line of credit will help Paradigm Genetics reduce its burn rate, and the company still is shooting for profitability in the fourth quarter based on new guidance issued Thursday.
Silicon Valley Bank has agreed to loan Paradigm (Nasdaq: PDGM) $5 million and set up a $2.5 million line of credit. Paradigm said some $3 million would be used to pay off existing equipment debt and added that the new loan is at a “significantly lower rates” than existing financing.
“This financing with Silicon Valley Bank represents another important step
in strengthening our balance sheet and moving towards financial
self-sustainment,” said Philip Alfano, Paradigm’s vice president of finance and chief financial officer, in a statement. “With this refinancing, we’ve extended our loan payments until 2007 and at significantly lower rates, thereby lowering our quarterly debt payments and, thus, our burn rate. We will continue to pursue other opportunities to further strengthen our balance sheet, such as obtaining additional equipment financing.”
Paradigm also revised its financial guidance, saying that it “is still targeting profitability” in the fourth quarter. But the company said “uncertainty in the timing” of expected revenues and projected deals could result in a loss of 4 cents a share or a profit of a penny a share.
Paradigm said it expected to have between $13 million and $15 million in cash and cash equivalents at the end of the year, nearly double previous estimates of $7 million to $9 million.
Silicon Valley Bank: www.svb.com
Paradigm Genetics: www.paradigmgenetics.com