GTC Biotherapeutics Enters Agreements with LFB for Funding of $12.3 Million with an Option for LFB to Fund an Additional $6.4 Million

Business Wire, June 18, 2009

GE Capital Term Loan Refinanced

FRAMINGHAM, Mass. -- GTC Biotherapeutics, Inc. (“GTC”, NASDAQ: GTCBD) has entered into agreements with LFB Biotechnologies, a wholly owned subsidiary of LFB S.A. (Laboratoire français du Fractionnement et des Biotechnologies S.A., Les Ulis, France) a current strategic shareholder in GTC, to provide a total of $12.3 million of cash proceeds to GTC with an option to provide up to an additional $6.4 million of cash proceeds. The financing consists of bridge debt and, subject to GTC shareholder approval, convertible preferred stock. GTC is receiving $4 million of cash proceeds under a $4.5 million secured convertible bridge note delivered upon signing, with an additional $8.3 million of cash proceeds due upon the receipt of GTC shareholder approval and issuance of the convertible preferred stock. The bridge debt will automatically convert into convertible preferred stock upon shareholder approval. The convertible preferred stock will carry a 10% dividend over 5 years, and the total coupon amount of $12.8 million will be fully funded by LFB Biotechnologies and placed into escrow at closing to secure the future dividends from this convertible preferred stock. The conversion price for 47% of the convertible preferred stock will be $2.63 per share of common stock, representing a total of 4,562,738 shares, and for the remaining 53% it will be at $2.63 per share or the market price at shareholder approval, whichever is lower, representing at least 5,133,079 shares of common stock.

“GTC has entered into this financing arrangement with LFB following a careful and extensive assessment of the alternative opportunities available to us in the capital markets,” stated Geoffrey F. Cox, Ph.D., GTC’s CEO and Chairman of the Board. “In today’s challenging capital markets a continuing committed strategic investor such as LFB is highly valuable to the future of GTC.”

“LFB shares GTC’s vision for the development of recombinant versions of plasma proteins and monoclonal antibodies, including biosimilars,” stated Christian Béchon, LFB’s Chairman & CEO. “GTC’s unique approved transgenic production technology enables us to jointly meet cost and production capability targets that are less competitive using other systems.”

As part of these agreements, LFB is also providing $3.5 million of term debt for GTC to pay off the remaining net principal amount of its GE Capital loan. This $3.5 million of new debt to LFB will be repaid on a 10-year amortization schedule at 10.8% interest with a balloon payment on January 1, 2012. LFB will hold first liens on all assets, including intellectual property, to secure this debt and its existing debt from GTC. The $4.5 million of bridge debt funding will be on the same amortization schedule and with the same collateral as the new term debt.

After shareholder approval, GTC will have received $12.3 million of cash proceeds. Upon conversion of this convertible note, LFB will have the option to use the additional $12.8 million of escrowed interest to purchase additional shares of convertible preferred stock with the same conversion prices allocated in the same proportions as in the original investment. If the option is fully exercised, it would provide an additional $6.4 million of cash funding to GTC on the same terms as the initial investment.

In total, if LFB Biotechnologies fully exercises its options, its new financial commitments to GTC will be up to $22.1 million including the new loans, convertible preferred stock and options to purchase additional preferred stock.

Merriman Curhan Ford acted as financial advisor to GTC in this transaction.

About GTC Biotherapeutics

GTC Biotherapeutics develops, supplies and commercializes therapeutic proteins produced through transgenic animal technology. ATryn®, GTC’s recombinant human antithrombin, has been approved for use in the United States and Europe. ATryn is the first and only product produced in transgenic animals to be approved for therapeutic use anywhere in the world. In addition to ATryn, GTC is developing a portfolio of recombinant human plasma proteins with known therapeutic properties. These proteins include recombinant forms of human coagulation factors VIIa and IX, which are being developed for the treatment of hemophilia. GTC is also developing a portfolio of follow-on biologic monoclonal antibodies and a CD20 antibody with enhanced ADCC (antibody-dependent cell-mediated cytotoxicity). GTC’s intellectual property includes a patent in the United States through 2021 for the production of any therapeutic protein in the milk of any transgenic mammal. GTC’s transgenic production platform is particularly well suited to enabling cost effective development of proteins that are difficult to express in traditional recombinant production systems as well as proteins that are required in large volumes. Additional information is available on the GTC web site, http://www.gtc-bio.com.