Collegium Pharmaceutical, Inc. (Nasdaq: COLL) today announced the
pricing of its offering of $210,000,000 aggregate principal amount
of 2.875% convertible senior notes due 2029 (the “notes”) in a
private offering to qualified institutional buyers pursuant to Rule
144A under the Securities Act of 1933, as amended (the “Securities
Act”). The offering was upsized from the previously announced
offering size of $175,000,000 aggregate principal amount of notes.
Collegium also granted the initial purchasers of the notes an
option to purchase, for settlement within a period of 13 days from,
and including, the date the notes are first issued, up to an
additional $31,500,000 principal amount of notes. The sale of the
notes to the initial purchasers is expected to settle on February
10, 2023, subject to customary closing conditions.
The notes will be senior, unsecured obligations
of Collegium and will accrue interest at a rate of 2.875% per
annum, payable semi-annually in arrears on February 15 and August
15 of each year, beginning on August 15, 2023. The notes will
mature on February 15, 2029, unless earlier repurchased, redeemed
or converted. Before November 15, 2028, noteholders will have the
right to convert their notes only upon the occurrence of certain
events. From and after November 15, 2028, noteholders will have the
right to convert their notes at any time at their election until
the close of business on the scheduled trading day immediately
before the maturity date. Collegium will settle conversions by
paying or delivering, as applicable, cash, shares of its common
stock or a combination of cash and shares of its common stock, at
Collegium’s election. The initial conversion rate is 27.3553 shares
of common stock per $1,000 principal amount of notes, which
represents an initial conversion price of approximately $36.56 per
share of common stock. The initial conversion price represents a
premium of approximately 30% over the last reported sale price of
$28.12 per share of Collegium’s common stock on February 7, 2023.
The conversion rate and conversion price will be subject to
adjustment upon the occurrence of certain events.
The notes will be redeemable, in whole or in
part (subject to certain limitations), for cash at Collegium’s
option at any time, and from time to time, on or after February 17,
2026 and on or before the 40th scheduled trading day before the
maturity date, but only if the last reported sale price per share
of Collegium’s common stock exceeds 130% of the conversion price
for a specified period of time. The redemption price will be equal
to the principal amount of the notes to be redeemed, plus accrued
and unpaid interest, if any, to, but excluding, the redemption
date.
If certain corporate events that constitute a
fundamental change occur, then, subject to a limited exception,
noteholders may require Collegium to repurchase their notes for
cash. The repurchase price will be equal to the principal amount of
the notes to be repurchased, plus accrued and unpaid interest, if
any, to, but excluding, the applicable repurchase date.
Collegium estimates that the net proceeds to it
from the offering will be approximately $203.2 million (or
approximately $233.8 million if the initial purchasers fully
exercise their option to purchase additional notes), after
deducting the initial purchasers’ discounts and commissions and
Collegium’s estimated offering expenses.
Collegium intends to use approximately $140.1
million of the net proceeds from the offering to finance the
concurrent repurchase of $117.4 million aggregate principal amount
of its 2.625% Convertible Senior Notes due 2026 (the “2026 notes”),
as described below, and the remainder of the net proceeds for
general corporate purposes, which may include working capital,
capital expenditures and implementation of Collegium’s capital
allocation strategy, which is focused on executing business
development transactions targeting commercial-stage, durable
assets; rapid repayment of debt; and opportunistically returning
capital to shareholders. Collegium has not designated any specific
uses, other than the repurchase of 2026 notes, and has no current
agreements with respect to any acquisition or strategic
transaction.
Contemporaneously with the pricing of the notes
in the offering, Collegium entered into separate privately
negotiated transactions with certain holders of the 2026 notes to
repurchase $117.4 million aggregate principal amount of the 2026
notes for an aggregate of approximately $140.1 million of cash
(collectively, the “2026 notes repurchases”), which includes
accrued and unpaid interest on the 2026 notes to be
repurchased.
Collegium expects that certain holders of 2026
notes that agreed to sell their 2026 notes in negotiated
transactions with Collegium may, concurrently with or shortly after
the pricing of the notes, enter into or unwind various derivatives
with respect to Collegium’s common stock and/or purchase shares of
its common stock in the market. The amount of Collegium’s common
stock that such holders purchase may be substantial in relation to
the historic average daily trading volume of the common stock. In
addition, Collegium expects that certain purchasers of the notes
offered in the offering of notes may establish a short position
with respect to its common stock by short selling the common stock
or by entering into short derivative positions with respect to the
common stock, in each case, in connection with the offering. The
net effect of the market activities described above by holders of
2026 notes and purchasers of the notes offered in the offering
could increase (or reduce the size of any decrease in) or decrease
(or reduce the size of any increase in) the market price of
Collegium’s common stock and/or the market price of the notes
offered in the offering and may have affected the initial
conversion price of the notes, and Collegium cannot predict the
magnitude of such market activities or the overall effect they will
have on the market price of its common stock or the market price of
the notes.
The notes were only offered to persons
reasonably believed to be qualified institutional buyers pursuant
to Rule 144A under the Securities Act. The offer and sale of the
notes and any shares of common stock issuable upon conversion of
the notes have not been, and will not be, registered under the
Securities Act or any other securities laws, and the notes and any
such shares cannot be offered or sold except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any other
applicable securities laws. This press release does not constitute
an offer to sell, or the solicitation of an offer to buy, the notes
or any shares of common stock issuable upon conversion of the
notes, nor will there be any sale of the notes or any such shares,
in any state or other jurisdiction in which such offer, sale or
solicitation would be unlawful.
About Collegium Pharmaceutical,
Inc.
Collegium is a diversified, specialty
pharmaceutical company committed to improving the lives of people
living with serious medical conditions. Collegium’s headquarters
are located in Stoughton, Massachusetts.
Forward-Looking Statements
This press release includes forward-looking
statements within the meaning of The Private Securities Litigation
Reform Act of 1995, including statements regarding: whether
Collegium will issue the notes; the expected amount and intended
use of the net proceeds from the offering; Collegium’s expectations
regarding the effects of the 2026 notes repurchases; and whether
the 2026 notes repurchases will close. Collegium may, in some
cases, use terms such as "predicts," "forecasts," "believes,"
"potential," "proposed," "continue," "estimates," "anticipates,"
"expects," "plans," "intends," "may," "could," "might," "should" or
other words that convey uncertainty of future events or outcomes to
identify these forward-looking statements. Forward-looking
statements represent Collegium’s current expectations regarding
future events and are subject to known and unknown risks and
uncertainties that could cause actual results to differ materially
from those implied by the forward-looking statements. Among those
risks and uncertainties are risks related to market conditions, the
satisfaction of the closing conditions related to the offering and
risks relating to the transactions, Collegium and its business,
including those described under the heading “Risk Factors” in
Collegium’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2022 and other filings with the SEC, and in the
preliminary offering memorandum related to the offering. Collegium
may not consummate the offering or the 2026 notes repurchases
described in this press release and, if the offering is
consummated, cannot provide any assurances regarding its ability to
effectively apply the net proceeds from the offering as described
above. Any forward-looking statements included in this press
release speak only as of the date of this press release. Collegium
does not undertake any obligation to update the statements included
in this press release for subsequent developments, whether as a
result of new information, future events or otherwise, except as
may be required by law.
Investor Contact: Christopher
James, M.D. Vice President, Investor Relations
ir@collegiumpharma.com
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