Cytokinetics Announces Proposed Public Offering of Convertible Senior Notes
November 06 2019 - 4:05PM
Cytokinetics, Incorporated (Nasdaq: CYTK) today announced that it
expects to sell, subject to market and other conditions, an
aggregate of $100.0 million principal amount of its convertible
senior notes due 2026, or the notes, in an underwritten public
offering. Cytokinetics expects to grant the underwriters a 30-day
option to purchase up to an additional $15.0 million aggregate
principal amount of the notes in connection with the offering,
solely to cover over-allotments. All of the notes will be sold by
Cytokinetics.
The notes will be senior unsecured obligations
of Cytokinetics and will accrue interest payable semiannually in
arrears. The notes will be convertible in certain circumstances
into cash, shares of Cytokinetics’ common stock, or a combination
of cash and shares of Cytokinetics’ common stock, at Cytokinetics’
election. The interest rate, initial conversion rate and other
terms of the notes will be determined at the time of the pricing of
the offering.
Cytokinetics intends to use the net proceeds
from the proposed offering to fund (i) the continued development of
and commercial readiness activities associated with omecamtiv
mecarbil, (ii) the continued clinical development of CK-274 and
related compounds in indications associated with hypertrophic
cardiomyopathies and related diseases associated with diastolic
dysfunction and cardiac fibrosis, including heart failure with
preserved ejection fraction, (iii) the continued clinical
development of reldesemtiv in patients with amyotrophic lateral
sclerosis and spinal muscular atrophy, including potential Phase 3
clinical trials and other commercial readiness activities, and (iv)
working capital and other general corporate purposes, including
tenant improvement of the new facility Cytokinetics plans to move
into in 2021, capital expenditures, debt service or retirement of
debt, including existing debt outstanding under Cytokinetics’ loan
and security agreement. Cytokinetics also intends to use a
portion of the net proceeds from the proposed offering to pay the
cost of the capped call transaction described below.
In connection with the pricing of the notes,
Cytokinetics expects to enter into a privately negotiated capped
call transaction (together with any additional capped call
transactions entered into in connection with the exercise by the
underwriters of their over-allotment option as described below, the
capped call transactions) with one of the underwriters in the
offering or its affiliate, or the capped call counterparty. The
capped call transactions will cover, subject to customary
adjustments, the number of shares of Cytokinetics’ common stock
that will initially underlie the notes. The capped call
transactions are generally expected to reduce the potential
dilution of Cytokinetics’ common stock and/or offset any cash
payments Cytokinetics is required to make in excess of the
principal amount of converted notes, as the case may be, as a
result of any conversion of the notes, with such reduction and/or
offset subject to a cap. If the underwriters in the offering
exercise their over-allotment option, Cytokinetics expects to use a
portion of the net proceeds from the sale of the additional notes
to enter into an additional capped call transaction with the capped
call counterparty.
In connection with establishing its initial
hedge of the capped call transactions, the capped call counterparty
or its affiliates expect to purchase shares of Cytokinetics’ common
stock and/or enter into various derivative transactions with
respect to Cytokinetics common stock concurrently with or shortly
after the pricing of the notes, including with certain investors in
the notes. This activity could increase (or reduce the size of any
decrease in) the market price of Cytokinetics' common stock or the
notes at that time.
In addition, the capped call counterparty or its
affiliates may modify its hedge positions by entering into or
unwinding various derivatives with respect to Cytokinetics’ common
stock and/or purchasing or selling Cytokinetics’ common stock or
other securities of Cytokinetics in secondary market transactions
following the pricing of the notes and prior to the maturity of the
notes (and are likely to do so on each exercise date of the capped
call transaction, which are expected to occur during the 60 trading
day period beginning on the 61st scheduled trading day prior to the
maturity date of the notes, or following any termination of any
portion of the capped call transaction in connection with any
repurchase, redemption or early conversion of the notes). This
activity could also cause or avoid an increase or decrease in the
market price of Cytokinetics’ common stock or the notes, which
could affect noteholders’ ability to convert the notes and, to the
extent the activity occurs during any observation period related to
a conversion of the notes, affect the amount and value of the
consideration that noteholders will receive upon conversion of the
notes.
Morgan Stanley & Co. LLC and Mizuho
Securities are acting as joint book-runners for the offering. JMP
Securities is acting as lead manager.
An automatic shelf registration statement
relating to the notes was previously filed with the Securities and
Exchange Commission, or SEC, and became immediately effective on
November 6, 2019. The offering will be conducted by means of
prospectus supplement and accompanying prospectus. The preliminary
prospectus supplement and the accompanying prospectus relating to
and describing the terms of the proposed offering is expected to be
filed with the SEC and, if and when filed, will be available on the
SEC’s website at www.sec.gov. Copies of the preliminary prospectus
supplement and the accompanying prospectus related to the offering
may also be obtained by contacting: Morgan Stanley & Co. LLC,
Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New
York, New York 10014; or Mizuho Securities USA LLC, Attn: Equity
Capital Markets, 320 Park Avenue, 12th Floor, New York, NY
10022-6815, by telephone (212) 205-7600, or by email:
US-ECM@us.mizuho-sc.com.
This press release shall not constitute an offer
to sell or the solicitation of an offer to buy the notes, nor shall
there be any sale of the notes in any state or jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state or jurisdiction.
About Cytokinetics Cytokinetics
is a late-stage biopharmaceutical company focused on discovering,
developing and commercializing first-in-class muscle activators and
next-in-class inhibitors as potential treatments for debilitating
diseases in which muscle performance is compromised and/or
declining.
Forward-Looking
StatementsCertain of the statements made in this press
release are forward looking, such as those, among others, relating
to Cytokinetics’ expectations regarding the completion, use of
proceeds, timing and size of the proposed offering and the capped
call transactions. 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 Cytokinetics will be able to raise capital through the sale of
its securities, the final terms of the proposed offering, market
and other conditions, and the satisfaction of customary closing
conditions related to the proposed offering. There can be no
assurance that Cytokinetics will be able to complete the proposed
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 proposed offering, Cytokinetics and
its business can be found under the heading “Risk Factors” in
Cytokinetics’ Annual Report on Form 10-K for the year ended
December 31, 2018 and other filings with the SEC, and in the
preliminary prospectus supplement related to the proposed offering
to be filed with the SEC on or about the date hereof. Except as
otherwise required by law, Cytokinetics does not undertake any
obligation to update forward-looking statements and expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in its expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statements are based.
Contact:CytokineticsDiane WeiserVice President, Corporate
Communications, Investor Relations(415) 290-7757
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