Egalet Corporation (Nasdaq: EGLT), a fully integrated specialty pharmaceutical company focused on developing, manufacturing and commercializing innovative treatments for pain and other conditions, today announced the completion of a secured debt offering of $40 million. Egalet plans to use the net proceeds from this transaction to repay all outstanding obligations to Hercules Capital, Inc. under its existing loan agreement, to support the approval and planned commercialization of ARYMO™ ER (Morphine Sulfate) extended-release tablets, an abuse-deterrent morphine, to support the development of Egalet-002, an abuse-deterrent, extended-release oxycodone, and for general corporate purposes. Morgan Stanley & Co. LLC acted as sole placement agent for the transaction.
Egalet received $40 million (before expenses) at the close of the transaction, and will receive an additional $40 million upon approval from the U.S. Food and Drug Administration (FDA) of ARYMO ER, if such approval is obtained on or before June 30, 2017. The notes bear interest at a rate of 13% per annum, paid semi-annually on March 20 and September 20 of each year, commencing on March 20, 2017. On each payment date, commencing on March 20, 2018, Egalet will pay an installment of principal of the notes pursuant to a straight-line fixed amortization schedule. However, if ARYMO ER is approved on or before June 30, 2017, in lieu of the straight-line fixed amortization schedule, on each payment date, commencing on March 20, 2018, Egalet will pay an installment of principal of the notes in an amount equal to 15% of the aggregate net sales of OXAYDO®(oxycodone HCI, USP) tablets for oral use only –CII, SPRIX® (ketorolac tromethamine) Nasal Spray, ARYMO ER and Egalet-002, less the amount of interest paid on the notes on such payment date. The stated maturity date of the notes is March 20, 2020, unless ARYMO ER is approved by the FDA on or before June 30, 2017, in which case the date will be September 20, 2033. The notes are redeemable at the option of Egalet at a redemption price which includes a make-whole premium until August 30, 2018 and, thereafter, at a redemption price that includes a declining premium to par over four years. The notes are secured by substantially all of the property and assets (subject to certain exclusions) of Egalet Corporation and its subsidiaries.
Additionally, Egalet has sold a royalty right to the note purchasers, representing a right to receive an aggregate 1.5% royalty payment on net sales of SPRIX and OXAYDO. If ARYMO ER is approved by the FDA on or beforeJune 30, 2017, in connection with the issuance of the second tranche of notes, Egalet will sell a royalty right to the note purchasers, representing a right to receive an aggregate 1.5% royalty payment on net sales of ARYMO ER. The royalty will be paid semi-annually, on the same dates as the notes and will be paid untilDecember 31, 2019 unless ARYMO ER is approved by the FDA on or before June 30, 2017, in which case,December 31, 2020.
"This non-dilutive financing puts us in a good position to bring ARYMO ER through FDA approval and if approved commercial launch, to complete Egalet-002 late-stage development and to conduct additional research and development of other compounds employing our proprietary Guardian™ Technology," said Bob Radie, president and chief executive officer of Egalet. "This financing combined with our existing cash on hand, SPRIX and OXAYDO product sales, and potential ARYMO sales, could take us to break even."
For more information regarding the terms and conditions of the notes, please refer to the current report on form 8-K filed today by Egalet with the Securities and Exchange Commission.
About Egalet
Egalet, a fully integrated specialty pharmaceutical company, is focused on developing, manufacturing and commercializing innovative treatments for pain and other conditions. Egalet has two approved products:OXAYDO® (oxycodone HCI, USP) tablets for oral use only –CII and SPRIX® (ketorolac tromethamine) Nasal Spray. In addition, using its proprietary Guardian Technology, Egalet is developing a pipeline of clinical-stage, product candidates that are specifically designed to deter abuse by physical and chemical manipulation. The lead programs, ARYMO™ ER, an abuse-deterrent, extended-release, oral morphine formulation, and Egalet-002, an abuse-deterrent, extended-release, oral oxycodone formulation, are being developed for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. Egalet's Guardian™ Technology can be applied broadly across different classes of pharmaceutical products and can be used to develop combination products that include multiple active pharmaceutical ingredients with similar or different release profiles. For additional information on Egalet, please visit egalet.com. For full prescribing information on SPRIX, including the boxed warning, please visit sprix.com. For full prescribing information on OXAYDO, please visit oxaydo.com.
