MediQuest Therapeutics
Client: MediQuest Therapeutics
Sector: Biotechnology
Transaction: Series A Preferred $16 million
MediQuest is a recently recapitalized company engaged primarily in leveraging applications of Amphi-Matrix, a topical drug delivery platform that can deliver pharmaceuticals through toughened skin and nails. At the time of Broadmark's engagement, the company had been in business for more than 10 years without attracting institutional capital. Consequently, its balance sheet was weak and it depended on existing accredited individual investors for periodic infusions of funding. In the summer of 2005, a local institutional investor offered MediQuest $1 million towards a $13- to $15-million Private Placement. Unable to raise the balance of the funding, the company engaged Broadmark that December. This was a difficult transaction: The company's balance sheet was weak, and the relatively small number of institutional investors interested in dermatology products perceived that the offer had already been "shopped." (Institutional investors favor companies developing potential "home run" therapies for common diseases.) Broadmark worked with MediQuest's management to restructure the pitch, focusing on the limited downside risk of this particular drug development process and the company's modest valuation compared to the likely valuation and timing of a potential IPO. By bringing this reworked offer to non-traditional institutional investors including large mutual funds and hedge funds interested in late-stage, low-risk opportunities in the healthcare sector, Broadmark facilitated a $16-million financing for MediQuest in June 2006.