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It's time to let you in on a dirty little secret: You may not own the stock you own. That's right, if you invest with a brokerage firm, the shares you bought are almost certainly not held in your name. Technically, they're held in the name of the Wall Street firm you do business with, hence the term "street name."
No, you haven't been robbed. Ultimately, the decision to hold shares on the books under a different name doesn't affect the economic ramifications for you. You¿re listed as the "beneficial owner," even though the firm is the official owner of the shares. But, you are giving up some rights, and investors concerned about good corporate governance might want to get that stock back in their own names.
Here's the problem: If your stock is technically owned by, say, Merrill Lynch, then Merrill Lynch gets to do things with it that might work against your wishes. Take short selling. Investors who want to sell shares short need to first borrow those shares. The lenders are often the big Wall Street firms that are handing out Street-name shares. So, if you feel that a company you own is a victim of aggressive short selling, chances are your own shares are being used to fuel the shorting.
Also, your brokerage firm can cast ballots on some corporate matters affecting a company without getting your input. Technically, this can only happen in votes considered ¿routine¿ by securities regulators. But, there's a big catch: some big events, like board elections, are considered "routine" under law.
The good news is that you can easily fix the Street name problem: Just request that your brokerage firm makes you the listed owner of the shares. If they refuse, find a new firm.
Home / Markets / Industries / Health Care
Monday, June 30, 2008
Depomed Secures $15 Million in Non-Dilutive Funding for Hot Flash Program
Comtex
MENLO PARK, Calif., Jun 30, 2008 (BUSINESS WIRE) ----Depomed, Inc. (NASDAQ:DEPO) announced today that it has entered into an agreement with Oxford Finance Corporation and GE Healthcare Financial Services for a $15 million senior secured loan that will be funded in three tranches through September 30, 2008.
Carl A. Pelzel, president and chief executive officer of Depomed, noted, "We set out last fall to secure non-dilutive funding for our hot flash program. At that time we felt that we were entering a period of financial uncertainty in the US where it was highly likely that access to capital could become restricted. Since our stock price was depressed at the time we wanted to be sure that our negotiating position with potential partners and the need to progress clinical trials did not push us into selling equity. We consider this an insurance policy since we have the option, not the obligation, to draw down the last two tranches of the loan. Now that we have had a positive meeting with the FDA on the requirements for the Phase 3 program it makes sense to use these funds to move the program forward."
Dr. Georg Yu, Depomed's associate director of corporate development, added, "Because we started the process last year we were able to secure very favorable terms. We are pleased to have met the rigorous credit approval standards of two of the leading lenders in the industry."
Under the agreement, Depomed has borrowed $3.8 million, and may borrow up to an additional $11.2 million on or before September 30, 2008. The two additional tranches are tied to clinical development and financial milestones. The loan is secured by a first priority security interest in all corporate assets, other than intellectual property. The loan will be repaid over 36 months on a straight amortization schedule. The interest rate on the first tranche, and the anticipated interest rate on any additional tranches, is 11.59%. No warrants to purchase Depomed equity securities were issued to the lenders.
About Depomed
Depomed, Inc. is a specialty pharmaceutical company with two approved products on the market and other product candidates in its pipeline. The company utilizes its proven, proprietary AcuForm(TM) drug delivery technology to improve existing oral medications, allowing for extended, controlled release of medications to the upper gastrointestinal tract. Benefits of AcuForm-enhanced pharmaceuticals include the convenience of once-daily administration, improved treatment tolerability and enhanced compliance and efficacy. Glumetza(R) (metformin hydrochloride extended release tablets) is approved for use in adults with type 2 diabetes. Proquin(R) XR (ciprofloxacin hydrochloride) extended release tablets are approved in the United States for the once-daily treatment of uncomplicated urinary tract infections and is marketed in the United States within the urology specialty by Watson Pharmaceuticals. Product candidate Gabapentin GR(R) is currently in clinical development for the treatment of neuropathic pain and for menopausal hot flashes. Additional information about Depomed may be found on its web site, www.depomedinc.com.
About Oxford Finance
Oxford Finance Corporation is a specialty financial services firm headquartered in Alexandria, Virginia with offices in Massachusetts and California. For two decades, Oxford's management team has provided loans to pioneers in the life science industry, and today Oxford is the only financial institution dedicated exclusively to this field. Oxford has originated over $900 million in loans over the past few years, with lines of credit ranging from $500,000 to $30 million.
About GE Healthcare Financial Services
GE Healthcare Financial Services is the premier provider of capital, financial solutions, and related services for the global healthcare market. With approximately $21 billion in assets, GE Healthcare Financial Services offers a full range of financing capabilities from equipment leasing and real estate financing to working capital lending, vendor programs, and acquisition financing. With a dedicated focus and a deep knowledge of the healthcare industry, GE Healthcare Financial Services collaborates with customers to create tailored financial solutions that help them improve their productivity and profitability. For more information, visit www.gehealthcarefinance.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties. The inclusion of forward-looking statements, including those related to the commercialization of Glumetza(TM) should not be regarded as a representation that any of our plans will be achieved. Actual results may differ materially from those set forth in this release due to the risks and uncertainties inherent in our business, including, without limitation, risks and uncertainties related to: our research and development efforts, including pre-clinical and clinical testing; regulation by the FDA and other government agencies; the timing of regulatory applications and product launches; our ability to successfully commercialize our products; the success of our collaborative arrangements with development and commercialization partners; and other risks detailed in our filings with the Securities and Exchange Commission filings, including our most recent Annual Report on Form 10-K and Quarterly report on form 10Q. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to revise or update this release to reflect events or circumstances that occur after the date of this release.
SOURCE: Depomed, Inc.
Depomed, Inc. Ina Cu, 650-462-5900
Copyright Business Wire 2008 ********************************************************************** As of Thursday, 06-26-2008 23:59, the latest Comtex SmarTrend� Alert, an automated pattern recognition system, indicated an UPTREND on 12-05-2007 for DEPO @ $3.01. For more information on SmarTrend, contact your market data provider or go to www.mysmartrend.com SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright � 2004-2008 Comtex News Network, Inc. All rights reserved.
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