Novelion Therapeutics Inc. (NASDAQ: NVLN) (Novelion), a
biopharmaceutical company dedicated to developing new standards of
care for individuals living with rare diseases, announced today
that its wholly-owned subsidiary Aegerion Pharmaceuticals, Inc.
(Aegerion) has entered into a plan funding agreement (PFA) and a
restructuring support agreement (RSA) that will result in Aegerion
selling 100% of its reorganized stock to, and becoming a
wholly-owned subsidiary of, Dublin-based Amryt Pharma Plc (Amryt).
The agreements, which will result in a
recapitalization of Aegerion (the Recapitalization), are the result
of the previously announced capital structure and strategic review
undertaken independently by the Boards of Directors of Novelion and
Aegerion, and a broad marketing process. The Recapitalization of
Aegerion pursuant to the PFA and a proposed Chapter 11 plan of
reorganization (the Plan) has been approved by Aegerion’s board and
approved and recommended by the independent restructuring committee
of Aegerion’s board. Novelion’s board has approved Novelion’s
entry into the RSA and support for Aegerion’s proposed Chapter 11
restructuring.
In conjunction with the Recapitalization,
Aegerion has entered into the RSA with many of its key
stakeholders, including Novelion, the holders of in excess of 67%
of the 2.00% convertible notes issued by Aegerion due 2019
(Existing Convertible Notes) and the holders of 100% of the
principal amount under Aegerion’s other indebtedness for borrowed
money.
To facilitate the Recapitalization, Aegerion and
its U.S. subsidiary Aegerion Pharmaceuticals Holdings, Inc. (the
Debtors) have commenced cases in the United States Bankruptcy Court
for the Southern District of New York (the Court) pursuant to
Chapter 11 of the United States Code. Aegerion will continue
to operate in the ordinary course of business during the Chapter 11
process. The non-U.S. subsidiaries of Aegerion are not part of the
Chapter 11 proceedings.
Certain Key Terms of the
Recapitalization
The Recapitalization ascribes an enterprise
value to Aegerion and Amryt of $395 million and $146 million,
respectively, excluding cash and cash equivalents and subject to
adjustment for accrued interest and certain payments that are due
to the DOJ and the SEC. The key terms of the Recapitalization (the
Restructuring Transactions), which are subject to Bankruptcy Court
approval and other customary conditions, include the following:
- Amryt acquiring 100% of the outstanding new equity interests in
recapitalized Aegerion;
- Ordinary equity of Amryt representing 61.4% of the outstanding
ordinary equity of Amryt, after giving effect to the Restructuring
Transactions but before giving effect to equity underlying the New
Convertible Notes, the Deal Equity Raise (each as described below),
ordinary shares that may be issuable in satisfaction of the CVR
(described below) if the relevant milestones are achieved, and
equity that is reserved for issuance under any management equity
compensation plan adopted by Amryt, will be distributed to certain
existing creditors of Aegerion in complete or partial satisfaction
of their claims, including in partial satisfaction of the claims of
the holders of the Existing Convertible Notes and in complete
satisfaction of Novelion’s approximately $36 million claims on
account of the Intercompany Loan;
- Pre-Recapitalization shareholders of Amryt continuing to own
38.6% of the outstanding ordinary equity of Amryt, after giving
effect to the Restructuring Transactions but before giving effect
to equity underlying the New Convertible Notes, the Deal Equity
Raise, and any equity issued on account of the CVRs and under any
management equity compensation plan adopted by Amryt;
- The equity interests of Aegerion held by Novelion being
terminated;
- Aegerion issuing $125 million of new 5% convertible notes (the
New Convertible Notes). The New Convertible Notes will be issued to
certain existing creditors of Aegerion in satisfaction of their
claims (and not for cash), including in satisfaction of a portion
of the Existing Convertible Notes, the approximately $22 million of
“Roll Up Debt” under the Aegerion’s existing bridge loan facility,
and any amounts drawn down under Aegerion’s DIP Financing (defined
below) that are not otherwise satisfied in cash at the closing of
the Restructuring Transactions;
- Aegerion’s existing Bridge Loan in the original principal
amount of $50 million, held by certain funds managed by Athyrium
Capital Management, LP (Athyrium) and Highbridge Capital
Management, LLC (Highbridge), as well as Amryt’s existing
approximately €20 million (in principal) of secured debt, will be
converted into new first-lien secured debt of Amryt and Aegerion,
which will have a cash interest rate of 6.5% per annum and an
additional 6.5% PIK (Paid in Kind) interest rate and mature five
years from the closing date of the Restructuring Transactions;
- Amryt shareholders prior to the consummation of the
Restructuring Transactions will receive a contingent value right
(CVR) entitling them to receipt of proceeds of up to $85 million
upon the occurrence of certain milestones related to the regulatory
approval and commercialization of AP 101, its late-stage
development product candidate, with such payments to be made in
loan notes or ordinary shares, at the election of its board;
- In connection with the closing of the Restructuring
Transactions, Amryt plans to raise $60 million through the issuance
of new equity of Amryt (the Deal Equity Raise). The proceeds from
the Deal Equity Raise will be used as provided in the Plan to pay
certain expenses and for general corporate purposes. The new
equity will be priced at a 20 percent discount to Amryt’s implied
valuation pro forma to the Restructuring Transaction with $18
million of the new equity offered to certain Amryt investors and
$42 million to certain creditors of Aegerion on a pro rata basis,
including Novelion. Certain of Aegerion bondholders,
including Athyrium, Highbridge, UBS and Whitebox, have agreed to
purchase any unsubscribed portion of the new equity;
- Aegerion intends to, and the Plan provides that Aegerion will,
continue to fully honor all obligations to the U.S. Department of
Justice, the U.S. Securities and Exchange Commission and other U.S.
and state government agencies and courts, which obligations will
not be impaired by the Restructuring Transactions;
- Aegerion intends to continue to pay all trade and other
ordinary operating expenses that arise during the course of the
Chapter 11 cases and, upon consummation of the Restructuring
Transactions, repay 100% of any allowed trade claims outstanding as
of the Chapter 11 filing;
- Under the terms of the PFA, following the approval by the Court
of certain provisions of the PFA, Aegerion and its advisors will
have a 55-day period to solicit alternative transactions that are
superior, from a financial point of view, to the Restructuring
Transactions. Subject to the limitations of the PFA¸ Aegerion
is also entitled to respond to unsolicited proposals if Aegerion
determines that such proposals are reasonably likely to result in a
superior transaction. Aegerion is entitled to terminate the
PFA in order to enter into a superior transaction, provided that it
reimburses Amryt for costs and expenses incurred in connection with
the Restructuring Transactions (with a cap of $4,000,000) at the
time of termination and pays a termination fee of $11,850,000 upon
the consummation of the superior transaction. Approximately 34.3%
of Amryt’s existing shareholders have committed to supporting the
Restructuring Transactions through written undertakings.
- The Debtors expect to enter into a $20 million super-priority
debtor-in-possession multi-draw term loan facility (the DIP
Financing) with Athyrium and Highbridge on terms and conditions set
forth in the DIP credit agreement and proposed DIP order filed with
the Court. Upon approval by the Court and the satisfaction of the
conditions set forth in the DIP credit agreement, the DIP Financing
will provide the Debtors with liquidity that will be used to
support the Restructuring Transactions. Any portion of the
DIP Financing that is drawn and not repaid in cash upon the closing
of the Restructuring Transactions will be converted into a portion
of the $125 million of New Convertible Notes discussed above. The
Debtors have also negotiated with their existing secured lenders
the terms of consensual use of cash collateral during the pendency
of the Chapter 11 cases.
The Recapitalization and business combination
between Aegerion and Amryt is expected to create a global rare
disease company with a diversified commercial and clinical-stage
portfolio with growing commercial assets and multiple late stage
product candidates. The development pipeline includes Amryt’s AP101
product candidate currently in Phase III development for
epidermolysis bullosa (EB), as well as additional potential
indications for Aegerion’s products, including metreleptin as a
potential treatment for partial lipodystrophy (PL) in the U.S.,
which is already approved in Europe, and lomitapide as a potential
treatment for familial chylomicronemia syndrome (FCS).
“The combination of Amryt and Aegerion will
create a financially stronger and well-capitalized rare disease
company with two commercial products and a pipeline of late stage
rare disease products. Amryt’s executive management team has the
depth of experience to commercialize Aegerion’s marketed products,
as demonstrated by its ability to grow sales of LOJUXTA® in the
European market, to develop and, if approved, commercialize Amryt’s
late stage product candidate, AP101, and to pursue additional
potential indications for metreleptin and lomitapide,” said Ben
Harshbarger, Novelion’s Interim Chief Executive Officer. “With the
opportunity to leverage synergies between the two companies to
reduce overlap in expenses and eliminate the intercompany royalties
through the existing LOJUXTA licensing agreement among the two
companies, we believe these transactions create a compelling growth
story and value creation opportunity for Aegerion and its
stakeholders, including Novelion.”
“The acquisition of Aegerion accelerates our
ambition to become a global leader in treating rare conditions
where there is a high unmet medical need,” commented Joe Wiley,
Chief Executive Officer of Amryt. By delivering two substantial
revenue-generating products and an enhanced pipeline of promising
development opportunities, this will significantly strengthen our
growth in highly attractive markets globally. Amryt has a unique
insight into both Aegerion and its products, through our commercial
success with LOJUXTA and given that many of our senior management
team previously worked at Aegerion.”
Impact on Novelion
Novelion has agreed to enter into the RSA and
support Aegerion’s proposed Chapter 11 plan, which Novelion
believes will avoid value destructive potential litigation with
Aegerion, its other secured lenders and the majority holders of the
Existing Convertible Notes, including as it may relate to
challenges to Novelion’s intercompany secured loan and the terms
that Aegerion could impose or “cram down” on Novelion through a
Chapter 11 plan that Novelion did not support. Under the proposed
plan, Novelion’s existing approximately $36 million intercompany
secured loan to Aegerion (the Intercompany Loan) will be allowed in
full and will receive a distribution of equity under Aegerion’s
plan of reorganization representing approximately 10.1% equity
ownership of Amryt on a pro forma basis, prior to any dilution from
equity to be issued in connection with Deal Equity Raise, upon
conversion of the New Convertible Notes, ordinary shares that may
be issuable in satisfaction of the CVR if the relevant milestones
are achieved, and equity that is reserved for issuance under any
management equity compensation plan adopted by Amryt. After
taking into account the new Amryt equity anticipated to be issued
in connection with the Deal Equity Raise, Novelion is projected to
own approximately 8.1% of Amryt. Novelion’s treatment under
the plan on account of its intercompany loan represents an
approximately 84% recovery and the equity received will be freely
transferable. Also, Novelion has the right to subscribe to
purchase its pro rata share of the $42 million of new equity being
offered to Aegerion’s creditors, which are priced at a 20 percent
discount to Amryt’s implied Recapitalization valuation. Due
to Novelion’s liquidity position, however, it is unlikely that
Novelion will exercise that right in full or at all.
In addition, the Debtors entered into shared
services agreements with Novelion and Novelion Services USA, Inc.,
a subsidiary of Novelion, dated as of December 1, 2016, but
effective as of November 29, 2016 (the Shared Services Agreements),
pursuant to which the Debtors provide to Novelion and Novelion
provides to the Debtors, certain services, including, but not
limited to administrative support, human resources, information
technology support, accounting, finance, and legal services.
In connection with the execution of the RSA and to facilitate the
restructuring, the Debtors and Novelion negotiated and executed an
amendment to the Shared Services Agreements (together, the Amended
Shared Services Agreements), which modified the Shared Services
Agreements to provide, among other things, for Aegerion to make
certain cash payments to Novelion on account of certain services
Novelion provided or will provide to Aegerion. Pursuant to
the Amended Shared Services Agreement, Aegerion has made a payment
to Novelion of approximately $3.1 million and has committed to make
additional cash payments of up to approximately $2 million.
Amended Shared Services Agreements provide Novelion with greater
and more certain recoveries from Aegerion for the critical shared
services Novelion provides.
Novelion will retain its existing cash balances,
public listing and net operating loss (NOL) carryforwards (subject
to applicable tax laws). The value, if any, of such listing
and NOL carryforwards are unknown at this time.
As a result of the valuation of Aegerion and its
outstanding debts, Novelion is not receiving any consideration
under Aegerion’s plan on account of its equity in Aegerion.
Those existing equity interests are being cancelled under
Aegerion’s Chapter 11 plan and Aegerion is issuing new equity
interests to Amryt in exchange for the consideration to be paid
under the PFA. Because its equity interests are being
cancelled for no consideration under the Chapter 11 plan, Novelion
is deemed to reject the plan in its capacity as a shareholder. By
operation of U.S. bankruptcy law, however, Aegerion’s plan may be
confirmed and consummated notwithstanding the deemed rejection by
Novelion as its sole equity holder.
In furtherance of its duty to maximize value for
its shareholders, the board of directors of Novelion, together with
its management team and legal and financial advisors, is evaluating
post-closing plans with respect to Novelion, including a potential
wind-up of Novelion and a distribution of assets to shareholders,
and recommendations related to same will be communicated to
shareholders in due course.
Aegerion Chapter 11 Cases
As described above, to facilitate the
Recapitalization, concurrent with the PFA and RSA, the Debtors
filed for Chapter 11 protection. Aegerion will continue to
operate in the ordinary course of business during the Chapter 11
cases. Novelion and non-U.S. Aegerion subsidiaries are not debtors
in these Chapter 11 cases.
Importantly, during the pendency of the Chapter
11 cases, Aegerion intends to:
- continue to make available to patients its two approved
therapies, JUXTAPID and MYALEPT;
- continue to pay all trade and other ordinary course operating
expenses during the course of the Chapter 11 cases and, upon
consummation of the Recapitalization, repay 100% of any allowed
trade claims; and
- continue to pay and provide all ordinary course compensation
and benefits to its existing employees, without any impairment,
delay, adjustment or changes.
Amryt Listing, Board of Directors and
Management
1 Amryt will continue to be listed on the AIM
market of the London Stock Exchange. Following the
Recapitalization, Amryt’s global headquarters will be in Dublin,
Ireland and its U.S. headquarters will be in the Cambridge,
Massachusetts area.
Upon the closing of the Recapitalization, Amryt
will designate three members to its board, including CEO Joe Wiley,
and Athyrium and Highbridge will designate two members each to the
board. The Chairperson of the Board will be appointed by Amryt and
will be unaffiliated with Amryt, Novelion or Aegerion. Amryt
will continue to be led by its executive team, which will be
supplemented by certain Aegerion executives on both a transitional
and permanent basis. Amryt executives have significant experience
in the development and commercialization of rare disease products,
including specific knowledge of Aegerion’s products through its
licensing relationship for LOJUXTA® in the EU. In addition, certain
Amryt executives, including Chief Medical Officer Mark Sumeray and
Chief Commercial Officer David Allmond, are former members of
Aegerion’s executive team.
Closing Conditions and
Timing
The consummation of the Recapitalization is
subject to a number of closing conditions, including approval by
Amryt’s shareholders, approval of the independent Amryt
shareholders in connection with the whitewash waiver granted by the
UK Panel on Takeovers and Mergers, re-admission of Amryt’s ordinary
shares for trading on AIM, confirmation of the Aegerion plan of
reorganization by the Bankruptcy Court, and other customary closing
conditions.
The parties expect the transaction to close in
the late third or early fourth calendar quarter of 2019.
Advisors
Evercore acted as financial advisor and Goodwin
Procter LLP and Norton Rose Fulbright Canada LLP acted as legal
advisors to Novelion. Moelis & Company LLC acted as financial
and restructuring advisor, AP Services, LLC acted as financial
advisor and chief restructuring officer, and Willkie Farr &
Gallagher LLP acted as legal advisor to Aegerion. Ducera Partners
LLC acted as financial advisor and Latham & Watkins LLP and
King & Spalding LLP acted as legal advisors to the ad hoc group
of convertible noteholders.
Additional details, including copies of the PFA,
RSA and other agreements, will be contained in Current Report on
Form 8-K that Novelion intends to file with the Securities and
Exchange Commission (www.sec.gov). Investors are encouraged
to read the Current Report on Form 8-K and the agreements filed
therewith, and the foregoing summary of the Recapitalization is
qualified in its entirety by reference thereto.
Conference Call Details
Amryt Management will host a conference call for
analysts today at 1330 BST (0830 EDT). Dial in details:Conference
ID: 3387304From the UK/International: +44
(0) 2071 928000 / 0800 376 7922From Ireland: (01)
431 9615 / 1800 936148From the US: +1 631 510 7495
/ 1 866 966 1396
A recording of the call will be available from
18.30 (BST) today, please email ir@amrytpharma.com for access
details.
About Novelion
TherapeuticsNovelion, through its subsidiary Aegerion
Pharmaceuticals, is a global biopharmaceutical company dedicated to
developing and commercializing therapies that deliver new standards
of care for people living with rare diseases. With a global
footprint and an established commercial portfolio, including
MYALEPT® (metreleptin) and JUXTAPID® (lomitapide), our business is
supported by differentiated treatments that treat severe and rare
diseases.
About AmrytAmryt is a
biopharmaceutical company focused on developing and delivering
innovative new treatments to help improve the lives of patients
with rare or orphan diseases.
LOJUXTA® is an approved treatment for adult
patients with the rare cholesterol disorder - Homozygous Familial
Hypercholesterolaemia ("HoFH"). This disorder impairs the body's
ability to remove low density lipoprotein ("LDL") cholesterol
("bad" cholesterol) from the blood, typically leading to abnormally
high blood LDL cholesterol levels in the body from before birth -
often ten times more than people without HoFH - and subsequent
aggressive and premature narrowing and blocking of blood
vessels. LOJUXTA® is indicated as an adjunct to a low-fat
diet and other lipid-lowering medicinal products with or without
LDL apheresis in adult patients with HoFH.
Amryt is the marketing authorisation holder and
has an exclusive license to sell LOJUXTA® across the European
Economic Area, Middle East and North
Africa, Switzerland, Turkey, Israel, Russia,
the Commonwealth of Independent States and the non-EU Balkan
states.
Amryt's lead development candidate, AP101, is a
potential treatment for Epidermolysis Bullosa ("EB"), a rare
and distressing genetic skin disorder affecting young children and
adults for which there is currently no treatment. It is
currently in Phase 3 clinical trials and recently reported positive
unblinded interim efficacy analysis results and is anticipated will
be fully enrolled by end of H2 2019. The European and US market
opportunity for EB is estimated to be in excess of $1
billion.
In March 2018, Amryt in-licenced a pre-clinical
gene-therapy platform technology, AP103, which offers a potential
treatment for patients with Recessive Dystrophic Epidermolysis
Bullosa, a subset of EB, and is also potentially relevant to other
genetic disorders.
For more information on Amryt, please visit
www.amrytpharma.com.
Forward-Looking Statements and Risk
Factors Certain statements in this press release
constitute “forward-looking statements” and “forward-looking
information” within the meaning of applicable laws and regulations,
including U.S. and Canadian securities laws. Any statements
contained herein which do not describe historical facts, including,
among others, statements regarding beliefs about, and expectations
for, plans to undertake a comprehensive restructuring of Aegerion
Pharmaceuticals, the proposed transaction between Aegerion
Pharmaceuticals and Amryt, including the key terms, expected
ownership, benefits of the proposed transaction to Novelion’s and
Aegerion’s stakeholders, expected closing and performance of the
combined company, and the RSA are forward-looking statements which
involve risks and uncertainties that could cause actual results to
differ materially from those discussed in such forward-looking
statements.
Such risks and uncertainties include, among
others, Novelion’s and Aegerion’s ability to meet immediate
operational needs and obligations, as well as long-term
obligations; Novelion’s and Aegerion’s ability to continue as a
going concern; the possibility that the restrictions in and other
terms of Aegerion’s loan arrangements could have a negative impact
on Novelion’s business and its shareholders (whose interests may
not be aligned, and may be in conflict, with those of Aegerion’s
holders of convertible notes and other lenders); whether Aegerion
will be able to successfully complete the Restructuring
Transactions; that Novelion will not realize the benefits of the
Restructuring Transactions; potential adverse effects of the
Chapter 11 cases; the Debtors ability to obtain timely approval by
the Court with respect to motions filed in the Chapter 11 cases;
objections to the Restructuring Transactions, DIP Financing or
other pleadings filed that could protract the Chapter 11
cases; the effects of the bankruptcy petitions on Novelion
and on the interest of various constituents, including holders of
Novelion’s common stock; the Court’s ruling in the Chapter 11
cases; risks associated with third party motions in the Chapter 11
cases; and increased administrative and legal costs related to the
Chapter 11 process and other litigation and inherent risks involved
in a bankruptcy process; Novelion’s ability to maintain its listing
status on Nasdaq (the failure of which would constitute an event of
default under Aegerion’s loan arrangements), as well as those risks
identified in Novelion’s filings with the Commission, including
under the heading “Risk Factors” in Novelion’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2018, and
subsequent filings with the Commission, all of which are available
on the Commission’s website at www.sec.gov.
We caution you not to place undue reliance on
any forward-looking statements, which speak only as of the date
they are made. Except as required by law, we undertake no
obligation to update or revise the information contained in this
press release, whether as a result of new information, future
events or circumstances or otherwise. Given the uncertainties,
assumptions and risk factors associated with this type of
information, including those described above, investors are
cautioned that the information may not be an appropriate subject of
reliance for other purposes.
Investors and others should note that we
communicate with our investors and the public using the Novelion
website www.novelion.com, including, but not limited to, company
disclosures, investor presentations and FAQs, Commission filings,
press releases, public conference call transcripts and webcast
transcripts. The information that we post on this website could be
deemed to be material information. As a result, we encourage
investors, the media and others interested to review the
information that we post there on a regular basis. The contents of
our website shall not be deemed incorporated by reference in any
filing under the Securities Act of 1933, as amended.
- Note: The announcement will lead to suspension. Following
publication of the admission document, the larger Amryt Group will
be listed on the AIM market.
CONTACT:Amanda (Murphy) Cray,
Director, Investor Relations & Corporate Communications
Novelion Therapeutics Inc. 857-242-5024
amanda.cray@novelion.com
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