ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) today announced the
pricing of $200 million aggregate principal amount of its 3.625%
convertible senior notes due 2019 (the “Notes”) in a private
placement. The Notes will be offered by the initial purchasers only
to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the “Act”). ARIAD also granted
the initial purchasers of the Notes an option, exercisable for 30
days, to purchase up to an additional $30 million aggregate
principal amount of the Notes on the same terms and conditions. As
a result of the convertible note hedge and warrant transactions
described below, the effective conversion price for the Notes is
expected to be $12.00 per share, which represents a 71% premium
over the closing price of ARIAD’s common stock of $7.02 per share
on June 11, 2014.
The sale of the Notes to the initial purchasers is expected to
settle on June 17, 2014, subject to customary closing conditions,
and is expected to result in $176.9 million net proceeds to ARIAD,
assuming no exercise of the initial purchasers’ option to purchase
additional Notes, or $203.7 million if the initial purchasers
exercise their option to purchase additional Notes in full, after
deducting fees, estimated offering expenses payable by ARIAD and
the net cost of the convertible note hedge and warrant transactions
described below.
The Notes will be senior unsecured obligations of ARIAD, and
will bear interest at a rate of 3.625% per year. Interest will be
payable semi-annually in arrears on June 15 and December 15 of each
year, beginning December 15, 2014. The Notes will mature on June
15, 2019, unless earlier converted.
ARIAD expects to use the net proceeds of the offering for its
operations, including, but not limited to sales, marketing,
manufacturing and distribution of Iclusig® (ponatinib); global
development of its other product candidates, including clinical
trials, product and process development activities, manufacturing
and other activities; discovery research efforts to add to its
pipeline of product candidates; and for other general corporate
purposes, including, but not limited to repayment or refinancing of
indebtedness or other corporate borrowings, capital expenditures
and possible acquisitions.
The Notes will be convertible by the holders beginning December
15, 2018, or earlier upon specified events, and upon conversion,
the holders will receive, at ARIAD’s option, shares of ARIAD’s
common stock, cash or a combination of shares and cash. The Notes
will be convertible at an initial conversion rate of 107.5095
shares of common stock per $1,000 in principal amount of Notes,
which is equivalent to an initial conversion price of approximately
$9.30 per share, subject to adjustment in certain circumstances
specified in the indenture governing the Notes. The initial
conversion price represents a conversion premium of 32.5% over the
closing price of ARIAD’s common stock of $7.02 per share on June
11, 2014, as reported on The NASDAQ Global Select Market. Following
certain corporate events that occur prior to the maturity date,
ARIAD will increase the conversion rate for a holder who elects to
convert its Notes in connection with such a corporate event in
certain circumstances.
In connection with the pricing of the Notes, ARIAD entered into
a convertible note hedge transaction with an affiliate of one of
the initial purchasers (the “option counterparty”). The convertible
note hedge transaction is expected generally to reduce the
potential dilution to ARIAD’s common stock upon any conversion of
Notes and/or offset any cash payments ARIAD may be required to make
in excess of the principal amount of converted Notes, in each case,
in the event that the market price per share of ARIAD’s common
stock, as measured under the terms of the convertible note hedge
transaction, is greater than the strike price of the convertible
note hedge transaction (which initially corresponds to the initial
conversion price of the Notes and is subject to certain adjustments
substantially similar to those contained in the Notes). In
addition, in order to partially offset the cost of the convertible
note hedge transaction, ARIAD issued warrants to the option
counterparty at a higher strike price than the conversion price of
the Notes. The warrant transaction could separately have a dilutive
effect to the extent that the market value per share of ARIAD’s
common stock as measured over the applicable valuation period at
the maturity of the warrants exceeds the applicable strike price of
the warrants. However, subject to certain conditions, ARIAD may
elect to settle the warrant transaction in cash. If the initial
purchasers exercise their option to purchase additional Notes,
ARIAD may enter into an additional convertible note hedge
transaction and an additional warrant transaction with the option
counterparty.
ARIAD expects that, in connection with establishing its initial
hedge of the convertible note hedge and warrant transactions, the
option counterparty or an affiliate thereof will enter into various
derivative transactions with respect to ARIAD’s common stock
concurrently with or shortly after the pricing of the Notes. This
activity could increase (or reduce the size of any decrease in) the
market price of ARIAD’s common stock or the Notes at that time. In
addition, ARIAD expects that the option counterparty or an
affiliate thereof may modify its hedge positions from time to time
by entering into or unwinding derivative transactions with respect
to ARIAD’s common stock and/or by purchasing or selling shares of
ARIAD’s common stock or other securities of ARIAD in secondary
market transactions following the pricing of the Notes and prior to
the maturity of the Notes (and are likely to do so during any
observation period related to a conversion of the Notes). This
activity could also cause or avoid an increase or a decrease in the
market price of ARIAD’s common stock or the Notes, which could
affect the ability of Note holders to convert the Notes and, to the
extent the activity occurs during any observation period related to
a conversion of the Notes, it could affect the amount and value of
the consideration that Note holders will receive upon conversion of
the Notes. The convertible note hedge and warrant transactions have
not been, and will not be, registered under the Act or the
securities laws of any other jurisdiction and the securities may
not be offered or sold in the United States without registration or
an applicable exemption from registration requirements.
The Notes are being offered to qualified institutional buyers
pursuant to Rule 144A under the Act. Neither the Notes nor the
shares of ARIAD’s common stock issuable upon conversion of the
Notes, if any, have been registered under the Act or the securities
laws of any other jurisdiction and may not be offered or sold in
the United States absent registration or an applicable exemption
from such registration requirements.
This press release does not constitute an offer to sell, or a
solicitation of an offer to buy, nor shall there be any sale of
these securities in any state or jurisdiction in which such offer,
solicitation or sale is unlawful. Any offers of the securities will
be made only by means of a private offering memorandum pursuant to
Rule 144A under the Act.
About ARIAD
ARIAD Pharmaceuticals, Inc., headquartered in Cambridge,
Massachusetts and Lausanne, Switzerland, is an integrated global
oncology company focused on transforming the lives of cancer
patients with breakthrough medicines. ARIAD is working on new
medicines to advance the treatment of various forms of chronic and
acute leukemia, lung cancer and other difficult-to-treat cancers.
ARIAD utilizes computational and structural approaches to design
small-molecule drugs that overcome resistance to existing cancer
medicines.
Forward-Looking Statements
This press release contains forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended, including statements
about the anticipated closing of the offering, the convertible note
hedge and warrant transactions, related derivative transactions and
market activities by the option counterparty and/or its affiliates,
and the potential effects of such transactions, the expected
effective conversion price of the Notes as a result of the
convertible note hedge and warrant transactions, and the
anticipated use of the proceeds from the offering. Actual results
or developments may differ materially from those projected or
implied in these forward-looking statements. Factors that may cause
such a difference include, without limitation, risks and
uncertainties related to whether or not we will be able to raise
capital through the sale of the Notes, market and other conditions,
the satisfaction of customary closing conditions related to the
offering and the impact of general economic, industry or political
conditions in the United States or internationally. There can be no
assurance that we will be able to complete the offering on the
anticipated terms, or at all. You should not place undue reliance
on these forward-looking statements, which apply only as of the
date of this press release. Additional risks and uncertainties
relating to the offering, ARIAD and our business can be found under
the heading “Risk Factors” in the filings that we periodically make
with the SEC. In addition, the forward-looking statements included
in this press release represent our views as of the date of this
press release. We anticipate that subsequent events and
developments will cause our views to change. However, while we may
elect to update these forward-looking statements at some point in
the future, we specifically disclaim any obligation to do so. These
forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date of
this press release.
ARIAD Pharmaceuticals, Inc.For InvestorsKendra Adams,
617-503-7028Kendra.adams@ariad.comorFor MediaLiza Heapes,
617-620-4888Liza.heapes@ariad.com
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