Medexus Pharmaceuticals Inc. (“
Medexus” or the
“
Company”) (TSXV: MDP, OTCQB: PDDPF) today
announced that the Company, through its US-based subsidiary,
acquired Aptevo BioTherapeutics LLC, a Delaware limited liability
company owning the worldwide rights to the commercial hematology
asset, IXINITY®, from Aptevo Therapeutics, Inc. (NASDAQ: APVO) (the
“
Vendor”), a biotechnology company focused on
developing oncology, autoimmune and hematology therapeutics (the
“
Acquisition”). IXINITY® is an intravenous
recombinant factor IX therapeutic for use in patients 12 years of
age or older with Hemophilia B – a hereditary bleeding disorder
characterized by a deficiency of clotting factor IX in the blood,
which is necessary to control bleeding.
Key Highlights
- Medexus Pharma, Inc.
(“Medexus US”) acquired Aptevo BioTherapeutics
LLC, which owns the worldwide rights to the commercial hematology
asset, IXINITY®, for up-front cash consideration of approximately
US$30 million (inclusive of approximately US$9.5 million of working
capital acquired)
- For the first nine months of 2019,
IXINITY® generated revenues of US$23.4 million, representing
year-over-year growth of approximately 40%
- The U.S. hemophilia B market is
approximately US$734 million and growing, with a highly
concentrated prescriber base
- Acquisition strengthens Medexus’
specialty product portfolio and represents a strategic fit with
other products in the Medexus business development pipeline
- Allows Medexus to leverage its U.S.
operations for maximum impact through an expanded U.S. product
portfolio
- Expected to be immediately
accretive to Adjusted EBITDA1 before acquisition costs
- Acquisition financed entirely with
existing cash and a new US$20 million term loan credit facility
with MidCap Financial, an affiliate of Apollo Global
Management
Ken d’Entremont, Chief Executive Officer of
Medexus, commented, “We are very pleased to announce this
transformative acquisition. IXINITY® is an FDA approved product
with strong brand equity and a track record of safety, efficacy and
growing sales. This acquisition is perfectly aligned with our
corporate strategy to license or acquire accretive specialty
products that address essential patient needs, while allowing us to
leverage our established North American sales force and
infrastructure. Moreover, our ability to execute this transaction
through a combination of cash on hand and a new credit facility
further illustrates the strength of our balance sheet and projected
cash flows. We appreciate the support provided by
MidCap Financial and believe their participation in this financing
was fully aligned with our ultimate goal of delivering strong
profitability for our shareholders.”
The terms and conditions of the Acquisition are
governed by a purchase agreement entered into between Medexus US
and the Vendor (the “Purchase Agreement”).
In accordance with and pursuant to the Purchase Agreement,
Medexus US delivered up-front cash consideration of approximately
US$30 million to the Vendor at closing (inclusive of approximately
US$9.5 million of working capital acquired) and is required to make
certain deferred payments on net sales of IXINITY® in an amount
equal to (i) 2% of net sales until the earlier of (x) the
completion of the ongoing U.S. pediatric trial in respect of
IXINITY, and (y) June 30, 2022, and (ii) 5% of net sales thereafter
until March 1, 2035. In addition, the Purchase Agreement requires
Medexus US to make certain milestone payments upon IXINITY®’s
receipt of Canadian and European regulatory approval in each of
Germany, France, Spain, Italy and the United Kingdom and upon
IXINITY® achieving worldwide annual net sales of US$120 million, if
achieved by March 1, 2035.
New Credit Facility
Concurrently with the closing of the
Acquisition, the Company entered into a definitive credit agreement
with a syndicate of lenders (the “Lenders”)
agented by MidCap Financial, in respect to a US$20 million secured
term loan (the “Term Loan”), having a term of 40
months.
The Company and its active subsidiaries
(including Aptevo BioTherapeutics LLC) are the borrowers under the
Term Loan. Each borrower is jointly and severally liable for all
obligations of all borrowers under the Term Loan. The Term
Loan is secured by a first-priority security interest in all
existing and after-acquired assets of the Company and each other
borrower. Borrowings under the Term Loan bear interest at an annual
rate of one-month LIBOR plus 6.5%, subject to a LIBOR floor of
1.50%. Interest on the outstanding balance of the Term Loan
is payable monthly in arrears.
The Term Loan was used by the Company to fund a
portion of the purchase price of the Acquisition and to pay
transaction fees in connection therewith.
In connection with the Term Loan, subject to
receipt of final acceptance by the TSX Venture Exchange (the
“TSXV”), the Company will also grant to the
Lenders warrants to purchase that number of common shares in the
capital of the Company (“Common Shares”) equal to
2.00% of the amount funded under the Term Loan, converted to the
CAD equivalent based on the Bank of Canada noon exchange rate
divided by the exercise price (the “Exercise
Price”). The Exercise Price will be equal to
today’s closing price of the Common Shares on the TSXV. The Lender
warrants will expire concurrently with maturity of the Term
Loan.
About Medexus Pharmaceuticals
Inc.
Medexus is a leading specialty pharmaceutical
company with a strong North American commercial platform. The
Company’s vision is to provide the best healthcare products to
healthcare professionals and patients, through our core values of
Quality, Innovation, Customer Service and Teamwork. Medexus is
focused on the therapeutic areas of auto-immune disease and
pediatrics. The leading products are Rasuvo™ and Metoject®, a
unique formulation of methotrexate (auto-pen and pre-filled
syringe) designed to treat rheumatoid arthritis and other
auto-immune diseases; and Rupall™, an innovative allergy medication
with a unique mode of action.
For further information, please
contact:Ken d’Entremont, Chief Executive OfficerMedexus
Pharmaceuticals Inc.Tel: 905-676-0003E-mail:
ken.dentremont@medexus.com
Roland Boivin, Chief Financial OfficerMedexus
Pharmaceuticals Inc.Tel: 514-762-2626 ext. 202E-mail:
roland.boivin@medexus.com
Investor Relations
(U.S.):Crescendo Communications, LLCTel:
+1-212-671-1020E-mail: mdp@crescendo-ir.com
Investor Relations
(Canada):Frank CandidoDirect Financial Strategies and
Communication Inc.Tel: 514-969-5530E-mail:
frank.candido@medexus.com
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Forward Looking Statements
Certain statements made in this press release
contain forward-looking information within the meaning of
applicable securities laws (“forward-looking
statements”). The words “anticipates,” “believes,”
“expects,” will,” and similar expressions are often intended to
identify forward-looking statements, although not all
forward-looking statements contain these identifying words.
Specific forward-looking statements contained in this press release
include, but are not limited to, statements with respect to the
expected synergies of the Acquisition and statements regarding
expected impact of the Acquisition on the Company’s Adjusted
EBITDA. These statements are based on factors or assumptions
that were applied in drawing a conclusion or making a forecast or
projection, including assumptions based on historical trends,
current conditions and expected future developments. Since
forward-looking statements relate to future events and conditions,
by their very nature they require making assumptions and involve
inherent risks and uncertainties. The Company cautions that
although it is believed that the assumptions are reasonable in the
circumstances, these risks and uncertainties give rise to the
possibility that actual results may differ materially from the
expectations set out in the forward-looking statements. Material
risk factors include those set out in the Company's MD&A under
the heading “Risk Factors and Risk Management” and elsewhere in the
Company’s other disclosure documents filed with the applicable
Canadian securities regulatory authorities from time to time. Given
these risks, undue reliance should not be placed on these
forward-looking statements, which apply only as of the date hereof.
Other than as specifically required by law, the Company undertakes
no obligation to update any forward-looking statements to reflect
new information, subsequent or otherwise.
_______________________
1 The Company uses both International Financial
Reporting Standards (“IFRS”) and certain non-IFRS
measures to assess performance. Non-IFRS measures do not have any
standardized meaning prescribed by IFRS and are unlikely to be
comparable to any similar measures presented by other companies.
Non-IFRS measures, as presented herein include adjusted earnings
before interest, tax, depreciation and amortization
(“Adjusted EBITDA”). Please refer to the section
entitled “Cautionary Note Regarding Non-IFRS Financial Measures” in
the Company’s most recent management discussion and analysis
(“MD&A”) filed under SEDAR profile at
www.sedar.com for the definition and historical reconciliation to
the most comparable IFRS measure.
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