QLT to Acquire InSite Vision to Create a
Diversified, Pure-Play, Late-Stage Ophthalmic Pharmaceutical
Company
Combined Company Will Be Well-Capitalized
with a Cash Balance of Approximately $70 Million, Including Newly
Invested Capital from Broadfin Capital, JW Asset Management and
EcoR1 Capital
QLT to Issue $25 Million of Redeemable
Convertible Notes to Shareholders, Providing Them with the Option
of Near-Term Liquidity or Participation in the Future of
QLT
QLT, Deerfield and Other Leading Healthcare
Investors to Invest in Aralez Pharmaceuticals, a Newly Formed,
Exceptionally Managed, Commercial-Stage, Irish-Domiciled, Specialty
Pharmaceutical Company to Be Formed by the Acquisition of Tribute
Pharmaceuticals by POZEN, Inc.
QLT Shareholders to Be Offered Additional
Liquidity Opportunities Through Third-Party Commitments to Purchase
at Least $15 Million of Outstanding QLT Shares and $15 Million of
Newly Acquired Aralez Pharmaceuticals Shares
QLT Inc. (NASDAQ:QLTI) (TSX:QLT) (“QLT” or the “Company”)
announced today that it has signed definitive agreements on
multiple separate transformative transactions and will be returning
capital to shareholders. Together, these actions are expected to
create significant liquidity and near- and long-term value for QLT
shareholders.
- InSite Vision Acquisition: QLT
has entered into a definitive agreement to acquire (the “InSite
Acquisition”) InSite Vision Incorporated (OTC: INSV) (“InSite
Vision”) for $0.178 per share in an all-share transaction to create
a diversified, pure-play, late-stage ophthalmic pharmaceutical
company well equipped to advance QLT’s existing Phase III-ready
Retinoid Program and the multiple additional late-stage assets
acquired in the transaction. The Company will continue to be
well-capitalized and, following the InSite Acquisition, will have
approximately $70 million pro forma cash balance, including newly
invested capital from blue-chip healthcare investors Broadfin
Capital, LLC, JW Asset Management, LLC and EcoR1 Capital LLC
(“Co-Investors”). The Company will retain its NASDAQ and Toronto
Stock Exchange listings and will continue to be headquartered in
Canada.
- Investment in Aralez
Pharmaceuticals: QLT has entered into a definitive agreement to
make a $45 million equity investment in Aralez Pharmaceuticals plc
(“Aralez”), an Irish-domiciled company to be created by a
transaction announced earlier today that combines Tribute
Pharmaceuticals Canada Inc. (TSX VENTURE:TRX) (OTCQX:TBUFF)
(“Tribute”) and POZEN, Inc. (Nasdaq: POZN) (“POZEN”). QLT is
investing alongside a number of leading healthcare investors, led
by Deerfield Management Company ("Deerfield") and including
Broadfin Capital, LLC, who in aggregate will invest $350 million in
Aralez. In return for its $45 million investment, QLT will receive
ordinary shares in Aralez representing an approximately 9%
ownership stake (the “Aralez Shares”). Following the closing of the
InSite Acquisition, QLT intends to distribute the Aralez Shares to
QLT shareholders by way of a reduction of the paid-up capital on
QLT’s common shares. The distribution of Aralez Shares will provide
QLT’s shareholders with the opportunity to participate in the
growth of a newly formed, exceptionally managed, commercial-stage,
Irish-domiciled, specialty pharmaceutical company. The Co-Investors
have agreed to provide a backstop for up to $15 million of QLT’s
investment in Aralez, as a result of which QLT shareholders will be
able to elect to receive a portion of the distribution in cash
instead of the Aralez Shares, subject to proration. The backstop
provides QLT shareholders with the option of near-term liquidity
and shareholder choice.
- Redeemable Convertible Note
Issuance: Following QLT’s acquisition of InSite Vision and
Aralez Shares, QLT intends to return an additional $25 million to
QLT shareholders by issuing redeemable convertible notes. It is
anticipated that the notes will be issued by way of a reduction of
the paid-up capital on QLT’s common shares. The notes will provide
QLT shareholders with an additional option of near-term liquidity
or the potential for future capital investment in QLT.
The Board of Directors of QLT (the “Board”), following a
comprehensive strategic and business review process in consultation
with its financial advisor Greenhill & Co., has unanimously
determined that these transactions are the most attractive options
and in the best interests of QLT. In the Board’s view, the
transactions maximize value for shareholders through the continued
advancement of QLT’s existing Retinoid Program, retention of the
Company’s Canadian domicile and NOLs, and the investment by the
Company in attractive opportunities.
“These transactions help unlock the significant value of QLT’s
assets for our shareholders and will transform QLT from a company
with a single development asset into a more diverse, late-stage,
revenue-generating, pure-play ophthalmology company with a strong
balance sheet, Canadian domicile, significant tax assets and more
liquid stock. The transaction with Aralez Pharmaceuticals and the
redeemable note issuance are intended to optimize the allocation of
QLT’s excess cash,” said Jason M. Aryeh, Chairman of QLT.
“QLT's Board is very proud to enable our shareholders, along
with blue-chip healthcare investors, to participate in these value
creating transactions with truly innovative structures,” continued
Mr. Aryeh. “The significant co-investment of new capital being made
in QLT and Aralez Pharmaceuticals underscores the attractiveness of
these transactions and their potential to create shareholder
value.”
Over the next six months, the Co‐Investors have agreed to
provide additional liquidity opportunities to QLT shareholders
whereby they will commit to purchase at least $15 million worth of
QLT shares.
Terms of InSite Vision
Acquisition
Under the terms of the of the definitive agreement and plan of
merger, at closing of the InSite Acquisition InSite Vision
shareholders will receive 0.048 common shares of QLT for each
common share of InSite Vision they own, which equates to a value
of $0.178 per InSite Vision share based
on QLT's closing share price of $3.71 on June 5,
2015. This represents a 17.3% premium over InSite Vision’s 90-day
volume-weighted average share price of $0.152 as of June 5,
2015.
“The combination of QLT and InSite Vision will transform QLT
into a diversified, pure-play ophthalmic pharmaceutical company
with significantly enhanced near- and long-term growth potential,”
stated Dr. Geoffrey Cox, QLT’s interim chief executive officer.
“Following the InSite Acquisition, QLT will have a current revenue
stream from InSite’s AzaSite, a prepared NDA filing for BromSite
for post-cataract surgery, a Phase III trial-ready compound in
QLT’s existing oral Retinoid Program, and a second Phase III
trial-ready compound in Dexasite for blepharitis. Importantly, we
believe the new QLT will have sufficient funding for further
development of QLT’s oral Retinoid Program, InSite’s near-term lead
pipeline assets and business development opportunities. QLT will
have a strong cash position and balance sheet, a more liquid
publicly traded stock, valuable tax credits and net operating
losses, and a Canadian domicile.”
“The combined company offers significant upside potential from
QLT’s Retinoid Program and near-term revenue potential from our
NDA-ready BromSite opportunity,” said Timothy Ruane, Chief
Executive Officer of InSite Vision.
The Boards of Directors of both companies have unanimously
approved the InSite Acquisition, which is subject to customary
closing conditions, including regulatory approval, InSite Vision
shareholder approval and FDA acceptance of the filing of the
BromSite New Drug Application. In connection with the InSite
Acquisition, QLT has agreed to provide to Insite Vision a secured
loan facility until closing. The transaction is expected to close
in the third quarter of 2015.
Terms of QLT Investment in Aralez
Pharmaceuticals
Tribute and POZEN announced earlier today that they have entered
into a definitive agreement to form a combined company to be named
Aralez Pharmaceuticals plc and to be domiciled in Ireland. Aralez
is expected to trade on NASDAQ and TSX.
In connection with the proposed Aralez transaction (the “Aralez
Transaction”), the investor group led by Deerfield and Co-Investors
will invest $75 million in new equity of Aralez, of which QLT will
invest $45 million. In addition, Deerfield will invest $75 million
in convertible notes of Aralez, and will provide a $200 million
senior secured debt facility to fund future acquisitions. These
financings are scheduled to be completed simultaneously with the
closing of the Aralez Transaction expected in the fourth quarter of
2015.
Following the closing of the Aralez Transaction, QLT intends to
distribute the Aralez Shares that it acquires in the financing
representing an approximately 9% ownership stake in Aralez,
directly to QLT shareholders by way of a reduction of the paid-up
capital on QLT’s common shares. The Co-Investors have agreed to
provide a backstop for this distribution in the amount of $15
million. As a result, QLT shareholders will be able to elect to
receive a portion of the distribution in cash instead of Aralez
Shares, based on the per share price of QLT’s investment, up to $15
million, subject to proration.
“Through QLT’s unique investment in Aralez, QLT shareholders
will have the opportunity to participate in the enhanced potential
of a diverse commercial-stage pharmaceutical company with a strong
balance sheet, expanded geographic footprint, proven management
team and tax-efficient corporate structure,” stated Mr. Aryeh. “We
have tremendous respect for the management team of Adrian Adams and
Andrew Koven, who have a long track record of creating value for
shareholders, and we believe this investment opportunity will yield
material benefits for QLT shareholders, while the structure of the
investment provides the option of near-term liquidity and
shareholder choice.”
“I am very excited about the opportunity for Aralez
Pharmaceuticals and the significant potential for shareholder value
creation,” said Adrian Adams, who will be the CEO of Aralez.
“Aralez Pharmaceuticals brings together two leading specialty
pharma companies and creates a strong foundation for future growth,
leveraging Tribute’s extensive sales network, strong drug portfolio
and pipeline, and overlaying POZEN’s promising pipeline and unique
in-source drug development capability. I’m delighted to partner
with QLT on this opportunity and look forward to leading Tribute
and POZEN in their next chapter of growth.”
“We are pleased to partner with QLT in this attractive venture
and back a proven value creator like Adrian Adams,” said Alex
Karnal, Partner of Deerfield. “The combination of Tribute and POZEN
creates a larger, stronger and more diversified company with a
number of attractive assets and exciting market opportunities.
Under the leadership of Adrian Adams, we are confident that Aralez
Pharmaceuticals will build on the achievements of Tribute and POZEN
and create significant value for shareholders.”
Terms of the Redeemable Convertible
Notes
Subsequent to the closing of QLT’s acquisition of InSite Vision
and Aralez Shares, the Board intends to return an additional $25
million of capital to QLT shareholders. It is currently intended
that such return of capital will be effected by issuance of
redeemable convertible notes exchangeable at the noteholders’
discretion into QLT’s common shares with a 21-month term starting
from the third month following issuance. The conversion price of
the notes will be equal to volume-weighted average price of QLT’s
common shares for the 10 trading days following a record date to be
set by QLT for the issuance of the notes, plus a 35% premium. QLT
will establish an escrow fund of cash sufficient for payment of any
notes that are not converted to QLT common shares during the
conversion period. If the redeemable convertible notes are fully
converted into shares, $25 million held in escrow would be released
to QLT.
Newly Invested Capital From Experienced
Healthcare Investors
Following the closing of all of the above described
transactions, the Co-Investors have agreed to invest $20 million in
QLT. Legacy QLT shareholders will then own approximately 75% of QLT
and legacy InSite shareholders and Co-Investors will own
approximately 25% of QLT.
Conclusion of Strategic
Review
The transactions announced today mark the culmination of a
comprehensive review of strategic and business alternatives
conducted by the Board. Following the termination of the Company’s
agreement and plan of merger with Auxilium Pharmaceuticals in
October 2014, the Board engaged Greenhill & Co. to act as
financial advisor to the Company. Over the past five months,
Greenhill and the Board conducted a thorough process to manage
inbound inquiries and to contact potentially interested parties to
explore transactions that would maximize the value of QLT’s
Retinoid Program and its cash, tax and general corporate
assets.
“This series of transactions and capital return reflects the
continued commitment of QLT’s Board of Directors and management
team to deliver value to QLT shareholders,” said Dr. Cox. “The
proposed transactions reflect an innovative structure that is
designed to optimize shareholder value for QLT and InSite Vision.
Substantial capital is committed to the combined entity, additional
capital is earmarked for future investments in the combined
company, and a distribution of the Aralez Pharmaceuticals shares or
cash will be made to QLT shareholders. Together these transactions
transform QLT and create significant near- and long-term value for
the Company’s shareholders.”
Greenhill & Co. acted as exclusive financial advisor to QLT
on the transactions. Weil, Gotshal & Manges LLP and McCullough
O'Connor Irwin LLP acted as legal advisors to QLT.
About QLT
QLT is a biotechnology company dedicated to the development and
commercialization of innovative ocular products that address the
unmet medical needs of patients and clinicians worldwide. We are
focused on developing our synthetic retinoid program for the
treatment of certain inherited retinal diseases.
QLT’s head office is based in Vancouver, Canada and the Company
is publicly traded on NASDAQ Stock Market (symbol: QLTI) and the
Toronto Stock Exchange (symbol: QLT). For more information about
the Company’s products and developments, please visit our website
at www.qltinc.com.
About InSite Vision
InSite Vision is advancing new ophthalmologic products for
unmet eye care needs based on its innovative
DuraSite® platform technologies. The DuraSite and DuraSite 2
drug delivery systems extend the duration of drug retention on the
surface of the eye, thereby reducing the frequency of treatment and
improving the efficacy of topical drugs.
The DuraSite platform is currently leveraged in two commercial
products for the treatment of bacterial eye infections,
AzaSite®(azithromycin ophthalmic solution) 1%, marketed in the U.S.
by Akorn, Inc., and Besivance® (besifloxacin ophthalmic
suspension) 0.6%, marketed by Bausch + Lomb, a wholly owned
subsidiary of Valeant Pharmaceuticals
International. InSite Vision has prepared an NDA filing
for BromSite for the treatment of inflammation and prevention of
pain associated with cataract surgery and is advancing DexaSite
through Phase 3 studies for the treatment of blepharitis. For
further information on InSite Vision, please visit
www.insitevision.com.
About Tribute Pharmaceuticals Canada Inc.
Tribute Pharmaceuticals Canada Inc. (“Tribute”) is a specialty
pharmaceutical company with a primary focus on the acquisition,
licensing, development and promotion of healthcare products in
Canada and the U.S. markets.
Tribute markets Cambia® (diclofenac potassium for oral
solution), Bezalip® SR (bezafibrate),
Soriatane® (acitretin), NeoVisc® (1.0% sodium hyaluronate
solution) Uracyst® (sodium chondroitin sulfate solution 2%),
Fiorinal®, Fiorinal® C, Visken®, Viskazide® and
Collatamp® G in the Canadian market. Additionally,
NeoVisc® and Uracyst® are commercially available and are
sold globally through various international partnerships. Tribute
also has the U.S. rights to Fibricor® and its related authorized
generic. In addition, it has the exclusive U.S. rights to develop
and commercialize Bezalip® SR in the U.S. and has the
exclusive right to sell bilastine, a product licensed from Faes
Farma for the treatment of allergic rhinitis and chronic idiopathic
urticaria (hives), in Canada. The exclusive license is inclusive of
prescription and non-prescription rights for bilastine, as well as
adult and pediatric presentations in Canada. This product is
subject to receiving Canadian regulatory approval.
About POZEN Inc.
POZEN Inc. (“POZEN”) is a specialty pharmaceutical company that
to date has historically focused on developing novel therapeutics
for unmet medical needs and licensing those products to other
pharmaceutical companies for commercialization. By utilizing a
unique in-source model and focusing on integrated
therapies, POZEN has successfully developed and
obtained FDA approval of two self-invented products.
Funded by these milestones/royalty streams, POZEN has
created a portfolio of cost-effective, evidence-based integrated
aspirin therapies designed to enable the full power of aspirin by
reducing its GI damage.
POZEN’s common stock is traded under the symbol “POZN” on
The NASDAQ Global Market. For more detailed company
information, including copies of this and other press releases,
please visit www.pozen.com.
Important Information For Investors And Shareholders
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. In connection with the transactions referred
to in this material, QLT expects to file a registration statement
on Form S-4 with the Securities and Exchange Commission (“SEC”)
containing a proxy statement of InSite Vision that also constitutes
a preliminary prospectus of QLT. After the registration statement
is declared effective InSite Vision will mail a definitive proxy
statement/prospectus to stockholders of InSite Vision. This
material is not a substitute for the proxy statement/prospectus or
registration statement or for any other document that QLT or InSite
Vision may file with the SEC and send to QLT’s and/or InSite
Vision’s stockholders in connection with the proposed transactions.
INVESTORS AND SECURITY HOLDERS OF QLT AND INSITE VISION ARE URGED
TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders will be able to obtain free copies
of the proxy statement/prospectus (when available) and other
documents filed with the SEC by QLT or InSite Vision through the
website maintained by the SEC at http://www.sec.gov and, in QLT's
case, also on the System for Electronic Document Analysis Retrieval
("SEDAR") website maintained by the Canadian Securities
Administrators at www.sedar.com. QLT stockholders may also obtain
these documents, free of charge, from QLT's website at
www.qltinc.com under the heading "Investors" and then under the
heading "Proxy Circulars" or upon request directly to QLT to the
attention of "QLT Investor Relations," 887 Great Northern Way,
Suite 250, Vancouver, British Columbia, Canada, V5T 4T5. Copies of
the documents filed with the SEC by InSite Vision will be available
free of charge on InSite Vision’s website at www.InSiteVision.com
or by contacting InSite Vision at 510-747-1220.
QLT and InSite Vision and certain of their respective directors
and certain of their respective executive officers may be
considered participants in the solicitation of proxies with respect
to the proposed transactions under the rules of the SEC.
Information about the directors and executive officers of QLT is
set forth in its Annual Report on Form 10-K for the year ended
December 31, 2014, which was filed with the SEC on February 26,
2015. Information about the directors and executive officers of
InSite Vision is set forth in its Annual Report on Form 10-K for
the year ended December 31, 2014, which was filed with the SEC on
February 18, 2015. These documents can be obtained free of charge
from the sources indicated above. Additional information regarding
the participants in the proxy solicitations and a description of
their direct and indirect interests, by security holdings or
otherwise, will also be included in any proxy statement and other
relevant materials to be filed with the SEC when they become
available.
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this press release constitute
“forward-looking statements” of QLT within the meaning of the
Private Securities Litigation Reform Act of 1995 and constitute
“forward-looking information” within the meaning of applicable
Canadian securities laws. Forward looking statements include, but
are not limited to, statements concerning the proposed transaction
between QLT and InSite Vision, the proposed investment in Aralez
and the subsequent distribution of the Aralez stock (or cash in
lieu) to QLT shareholders, the issuance of convertible notes by
QLT, the investment by certain co-investors in QLT and the
availability of certain liquidity events for shareholders
(collectively, the “Proposed Transactions”) including any
statements regarding the expected timetable for completing the
Proposed Transactions, the effect of the Proposed Transactions on
QLT and the QLT stock, the potential benefits and synergies of the
InSite Vision acquisition, the future potential of Aralez and any
other statements regarding QLT’s future expectations, beliefs,
plans, objectives, financial conditions, assumptions or future
events or performance that are not historical facts are
“forward-looking” statements made within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements are
often, but not always, made through the use of words or phrases
such as “believe,” “expect,” “anticipate,” “should,” “planned,”
“will,” “may,” “intend,” “estimated,” “aim,” “on track,” “target,”
“opportunity,” “tentative,” “positioning,” “designed,” “create,”
“predict,” “project,” “seek,” “would,” “could,” “potential,”
“continue,” “ongoing,” “upside,” “increases,” and “potential” and
similar expressions. All such forward-looking statements involve
estimates and assumptions that are subject to risks, uncertainties
and other factors that could cause actual results to differ
materially from the results expressed in the statements. Among the
key factors that could cause actual results to differ materially
from those projected in the forward-looking statements are the
following: the timing to consummate the Proposed Transactions; the
risk that a condition to closing the Proposed Transactions may not
be satisfied; QLT’s ability to achieve the value creation
contemplated by the Proposed Transactions; QLT’s ability to
promptly, efficiently and effectively integrate InSite Vision’s
operations into its own operations; the diversion of management
time on the Proposed Transactions and uncertainties relating to
QLT’s development plans, timing and results of the clinical
development and commercialization of QLT and InSite Vision’s
products and technologies. Additional information concerning these
and other factors can be found in QLT’s and InSite Vision’s
respective filings with the SEC, including QLT’s and InSite
Vision’s most recent Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K. QLT assumes no
obligation to update any forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date hereof.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150608006028/en/
QLT Inc.:For Investors:Argot
PartnersAndrea Rabney or David Pitts,
212-600-1902andrea@argotpartners.comdavid@argotpartners.comorFor
Media:Abernathy MacGregorChuck Burgess or Mike Pascale,
212-371-5999clb@abmac.commmp@abmac.com
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