- Would result in significant expansion of
revenue and adjusted EBITDA –
- Would provide platform for future
growth
- Acquisition funding proposed to be
provided by Deerfield, a leading,
global, healthcare-specialized investor –
MISSISSAUGA, ON, Aug. 10, 2018 /CNW/ - Nuvo Pharmaceuticals Inc.
(Nuvo or the Company) (TSX:NRI; OTCQX:NRIFF), a healthcare company
with a portfolio of commercial products and pharmaceutical
manufacturing capabilities, today announced the signing of a letter
of intent with Aralez Pharmaceuticals Inc. (Aralez) (NASDAQ:ARLZ;
TSX:ARZ) to acquire a portfolio of more than 20 revenue-generating
products, as well as the associated personnel and infrastructure to
continue the products' management and growth (the Proposed
Transaction). Assuming completion of the Proposed Transaction,
Nuvo's pro forma 2017 revenues would have been approximately
4x higher than reported for fiscal 2017 and 2017 pro forma
adjusted EBITDA would have been approximately 10x higher than that
reported for fiscal 2017. The letter of intent contemplates Nuvo
paying Aralez US$110M in cash at
closing, which Nuvo expects to be satisfied through funding
provided by certain funds managed by Deerfield Management Company,
L.P. (Deerfield), a leading,
global, healthcare-specialized investor. Deerfield is also the senior secured lender to
Aralez. All references to dollars are in Canadian dollars, unless
otherwise specified.
Under the terms of the Proposed Transaction, Nuvo would acquire
Aralez's Canadian specialty pharmaceutical business, which was
formerly known as Tribute Pharmaceuticals Canada Inc. This is a
growing business that includes Cambia®,
BlextenTM, SuvexxTM (sold as
Treximet® in the USA),
as well as the Canadian distribution rights to Resultz,®
and would create a platform for Nuvo to acquire and launch
additional commercial products in Canada. The purchase would also include the
worldwide rights including royalties from licensees for
VIMOVO® and global, ex-US product rights to MT400 (to be
sold as Suvexx in Canada once
registered and currently commercialized in the USA as Treximet). Nuvo's current CEO and
CSO were formerly executives of Tribute Pharmaceuticals, providing
Nuvo with a deep knowledge of the products, the business history
and the key personnel involved in operating the business.
Jesse Ledger, CEO of Nuvo
commented, "The Proposed Transaction would be transformative for
Nuvo. It provides critical mass, an expanded platform for future
growth, diversifies our revenue streams and significantly increases
our projected revenue and adjusted EBITDA. We anticipate that
Deerfield will provide us not only
with financing but also with access to its expertise, relationships
and potential opportunities for future growth."
Financing:
Deerfield would be expected to
be the sole financier to Nuvo to fund the Proposed Transaction (the
Financing). Deerfield has
delivered a financing letter, which contemplates that Deerfield would provide Nuvo with a 6-year
term, 3.5% p.a. interest, senior secured debt facility in the
amount of US$112.5M. As part of the
Financing, Nuvo would issue to Deerfield 43.6 million common share purchase
warrants with an exercise price of $3.53 and a 6-year life (the Warrants). The
proceeds of exercised warrants would initially automatically reduce
the amount owing on the senior secured debt (to the extent not
already repaid by Nuvo).
Next Steps
To facilitate the transactions, Aralez, along with its Canadian
subsidiary, Aralez Pharmaceuticals Canada Inc., has elected to
commence voluntary proceedings under Canada's Companies' Creditor Arrangement
Act (the CCAA) in the Ontario Superior Court of Justice.
In connection with these proceedings, certain other subsidiaries of
Aralez have elected to file voluntary petitions under Chapter 11 of
the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern
District of New York.
Nuvo intends to continue to negotiate with Aralez and
Deerfield with a view to executing
definitive agreements in respect of the Proposed Transaction and
the Financing as soon as practicable. However, the letter of intent
with Aralez is non-binding and there is no legal obligation on
Nuvo, Aralez or Deerfield to enter
into definitive agreements in respect of the Proposed Transaction
or the Financing. Accordingly, there can be no assurance that the
Proposed Transaction or the Financing will proceed. Aralez has
agreed to negotiate exclusively with Nuvo (with respect to the
assets subject to the Proposed Transaction) until August 19, 2018. If definitive agreements in
respect of the Proposed Transaction are executed, those agreements
would be filed with the relevant bankruptcy courts as part of
Aralez's restructuring process and would be subject to court
approval. As part of the restructuring process, Aralez and its
subsidiaries would be permitted to conduct a sale process in
accordance with bidding procedures to be approved by the courts and
to pursue a superior acquisition proposal for any of the assets
subject to the Proposed Transaction in accordance with the bidding
procedures. The definitive agreement in respect of the Proposed
Transaction would serve as the "stalking horse" bid in such a sale
process and would entitle Nuvo to a customary termination fee if it
were not ultimately the successful bidder in the process.
If the parties enter into definitive agreements for the Proposed
Transaction and the Financing and Nuvo is the successful bidder in
the sale process, closing of the Proposed Transaction would be
subject to customary conditions, including approval of the Proposed
Transaction by the Canadian and U.S. bankruptcy courts. It is not
anticipated that the approval of Nuvo's shareholders would be a
condition to closing the Proposed Transaction or the Financing, but
Nuvo would seek the approval of its shareholders following closing
for certain terms of the warrants to be issued to Deerfield.
Nuvo does not intend to provide any further update regarding the
Proposed Transaction until definitive agreements for the Proposed
Transaction are entered into or the letter of intent has been
terminated.
About Nuvo Pharmaceuticals Inc.
Nuvo (TSX: NRI; OTCQX: NRIFF) is a global commercial healthcare
company with a portfolio of marketed products and pharmaceutical
manufacturing capabilities. Nuvo has four commercial products
that are available in a number of countries: Pennsaid® 2%,
Pennsaid, Resultz® and the heated lidocaine/tetracaine patch.
Nuvo manufactures Pennsaid 2% for the U.S market, Pennsaid for the
global market and the bulk drug product for the HLT Patch at its
FDA, Health Canada and E.U. approved manufacturing facility in
Varennes, Québec. The Company's
focus is to maximize the value of Pennsaid 2% and Resultz through
out-licensing to commercial partners in international markets and
identifying new opportunities to acquire additional, revenue
generating or late-stage products or businesses to further
diversify the Company's existing product portfolio. For additional
information, please visit www.nuvopharmaceuticals.com.
About Deerfield Management Company, L.P.
Deerfield is an investment
management firm, committed to advancing healthcare through
investment, information and philanthropy. For more information
about Deerfield, please visit
www.deerfield.com.
About Aralez Pharmaceuticals Inc.
Aralez Pharmaceuticals Inc. is a specialty pharmaceutical
company focused on delivering meaningful products to improve
patients' lives by acquiring, developing and commercializing
products in various specialty areas. Aralez's Global Headquarters
is in Mississauga, Ontario, Canada
and the Irish Headquarters is in Dublin,
Ireland. More information about Aralez can be found at
www.aralez.com.
About Cambia
Cambia (diclofenac potassium for oral solution) is a
non-steroidal anti-inflammatory drug (NSAID) and currently the only
prescription NSAID approved in Canada for the acute treatment of migraine
attacks with or without aura in adults 18 years of age or older.
Cambia was licensed from Nautilus Neurosciences, Inc. (Nautilus) in
November 2010, which was acquired by
Depomed, Inc. (Depomed) in December
2013. Cambia was approved by Health Canada in March 2012 and was commercially launched in
Canada in October 2012.
About Blexten
Blexten (bilastine tablets) is a second generation antihistamine
drug for the symptomatic relief of allergic rhinitis and chronic
spontaneous urticaria. Bilastine exerts its effect as a selective
histamine H1 receptor antagonist, and has an effectiveness similar
to other second generation antihistamines such as cetirizine,
fexofenadine and desloratadine. It was developed in Spain by FAES Farma, S.A. In April 2016, Health Canada approved bilastine with
the brand name Blexten (bilastine 20mg oral tablet) for the
treatment of the symptoms of Seasonal Allergic Rhinitis (SAR) and
Chronic Spontaneous Urticaria (CSU) (such as itchiness and hives).
Blexten was commercially launched in Canada in December
2016.
About Suvexx
Suvexx (sumatriptan/naproxen sodium) is a migraine medicine that
was developed by Aralez's wholly owned subsidiary Pozen, Inc. in
collaboration with Glaxo Group Limited, d/b/a GlaxoSmithKline
(GSK). The product is formulated with Pozen's patented technology
of combining a triptan, sumatriptan 85mg, with an NSAID, naproxen
sodium 500mg, and GSK's RT Technology™ in a single tablet. In 2008,
the FDA approved Treximet for the acute treatment of migraine
attacks, with or without aura, in adults. Treximet is currently
available in the United States
only. Aralez plans to file a New Drug Submission for Suvexx
with Health Canada towards the end of 2018.
About Vimovo
Vimovo (naproxen/esomeprazole magnesium) is the brand name for a
proprietary fixed-dose combination of enteric-coated naproxen, a
pain-relieving NSAID and immediate-release esomeprazole magnesium,
a proton pump inhibitor (PPI), in a single delayed-release tablet.
Pozen, Inc. developed Vimovo in collaboration with AstraZeneca. On
April 30, 2010, the U.S. Food and
Drug Administration (FDA) approved Vimovo for the relief of the
signs and symptoms of osteoarthritis, rheumatoid arthritis, and
ankylosing spondylitis, and to decrease the risk of developing
gastric ulcers in patients at risk of developing NSAID-associated
gastric ulcers. Vimovo is currently commercialized in the
USA by Horizon Pharma USA Inc. and by AstraZeneca in various rest of
world territories including Canada, Europe and select additional countries.
Cautionary Statements
Forward-Looking Statements
This press release contains "forward-looking statements"
within the meaning of applicable securities laws. Forward-looking
statements can be identified by words such as: "anticipate,"
"intend," "plan," "goal," "seek," "believe," "project," "estimate,"
"expect," "strategy," "future," "likely," "may," "should," "will"
and similar references to future periods. Forward looking
information in this press release includes, but is not limited to,
statements with respect to the ability of the parties to negotiate
definitive agreements in respect of the Proposed Transaction and
the Financing, the terms and conditions of the Proposed Transaction
and the Financing, the ability of the parties to complete the
Proposed Transaction and the Financing (including the satisfaction
of the conditions to completion of the Proposed Transaction and the
Financing), and the anticipated benefits of the Proposed
Transaction and the Financing (including the results of operation
of the acquired products and related assets following completion of
the Proposed Transaction). The forward-looking information
contained in this press release is based on certain expectations
and assumptions made by Nuvo, including: expectations and
assumptions concerning the entering into of the definitive
agreements in respect of the Proposed Transaction and the
Financing, the receipt of required approvals and the satisfaction
of other conditions to the Proposed Transaction; and that the
letter of intent will not be amended or terminated.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
the Company's current beliefs, expectations and assumptions
regarding the future of its business, future plans and strategies,
projections, anticipated events and trends, the economy and other
future conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of the Company's control. Nuvo's actual results
and financial condition may differ materially from those indicated
in the forward-looking statements due to a number of factors and
risks. Material factors and assumptions used to develop the
forward-looking information contained in this news release, and
material risk factors that could cause actual results to differ
materially from the forward-looking information, include but
are not limited to, the failure of the parties to agree on the
terms and conditions of the Proposed Transaction or the Financing,
the failure to satisfy the conditions relating to the Proposed
Transaction and the Financing (including failure to obtain any
required approvals, including the approval of the U.S. and Canadian
bankruptcy courts); the occurrence of any event, change or other
circumstance that could give rise to the termination of the letter
of intent; material adverse changes in the business or affairs of
the acquired businesses or Nuvo; either party's failure to
consummate the Proposed Transaction or the Financing when required;
competitive factors in the industries in which the acquired
businesses and Nuvo operate; interest rates, prevailing economic
conditions; and other factors, many of which are beyond the control
of Nuvo. Addition factors that could cause Nuvo's
actual results and financial condition to differ materially from
those indicated in the forward-looking statements include, among
others, the risk factors included in Nuvo's most recent Annual
Information Form dated March 22, 2018
under the heading "Risks Factors", and as described from time to
time in the reports and disclosure documents filed by Nuvo with
Canadian securities regulatory agencies and commissions. These and
other factors should be considered carefully and readers should not
place undue reliance on Nuvo's forward-looking statements. As a
result of the foregoing and other factors, no assurance can be
given as to any such future results, levels of activity or
achievements and none of Nuvo or any other person assumes
responsibility for the accuracy and completeness of these
forward-looking statements.
Any forward-looking statement made by the Company in this
press release is based only on information currently available to
it and speaks only as of the date on which it is made. Except as
required by applicable securities laws, Nuvo undertakes no
obligation to publicly update any forward-looking statement,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise.
Non-IFRS Financial Measures
Adjusted EBITDA is a non-IFRS financial measure. The term
"adjusted EBITDA" does not have any standardized meaning under IFRS
and therefore may not be comparable to similar measures presented
by other companies. The Company defines adjusted EBITDA as net
income before net interest income, plus income tax expense
(recovery), depreciation and amortization and stock-based
compensation. Management believes adjusted EBITDA is a useful
supplemental measure from which to determine the Company's ability
to generate cash available for working capital, capital
expenditures and income taxes. For additional information on
non-IFRS Financial measures, please refer to the reports and
disclosure documents filed by Nuvo with Canadian securities
regulatory agencies and commissions.
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SOURCE Nuvo Pharmaceuticals Inc.