SAN DIEGO, Jan. 4, 2016 /PRNewswire/ -- Halozyme
Therapeutics, Inc. (NASDAQ: HALO) today announced that it has
entered into a $150 million credit
agreement, secured by future royalties of ENHANZE™
products, received only from Halozyme's collaborations with Roche
and Baxalta.
"This transaction allows us to continue to execute our two
pillar strategy supporting the initiation of our phase 3 study in
pancreatic cancer, ongoing studies in non-small cell lung and
gastric cancers, and start of our planned trial in breast cancer in
collaboration with Eisai," said Dr. Helen
Torley, president and chief executive officer of
Halozyme. "This opportunity for non-dilutive financing
further demonstrates how our ENHANZE platform can drive value, and
is additive to the $25 million
upfront payment from the recently announced licensing and
collaboration agreement with Eli Lilly."
The debt transaction is expected to close in January 2016.
The financing will be facilitated through investment funds managed
by Pharmakon Advisors and Athyrium Capital Management. "We
are pleased to partner with Halozyme in this transaction," said
Martin Friedman, managing member of
Pharmakon Advisors. "We believe Halozyme's ENHANZE technology adds
tremendous value to biologic products as demonstrated by the
strength of Halozyme's collaborations with Roche and
Baxalta." As part of the financing structure, Halozyme formed
a wholly-owned subsidiary, Halozyme Royalty LLC ("Halozyme
Royalty"), which, subject to satisfaction of certain closing
conditions, will borrow $150 million
at a per annum interest rate of 8.75 percent plus the three-month
LIBOR rate. Under the terms of the loan, the three-month LIBOR rate
is subject to a floor of 0.70 percent and a cap of 1.50
percent.
On the closing date, Halozyme will transfer to Halozyme Royalty
the right to receive certain royalty payments from the commercial
sales of Herceptin SC and MabThera SC under Halozyme's
collaboration agreement with Roche and from the commercial sales of
Hyqvia under Halozyme's collaboration agreement with Baxalta.
Halozyme will continue to record and report royalty revenues over
the term of the loan, using the payments from the collaboration
agreements as the source of funds to repay the principal and
interest on the loan. Milestone payments received under any
current or future collaboration agreements are excluded from the
transaction.
Under the terms of the credit agreement, Halozyme Royalty will
not be required to apply any of the royalty payments to repay the
loan during 2016. All interest accrued in 2016 will be
capitalized and added to the outstanding balance of the loan.
Halozyme Royalty will only be required to apply 50 percent of
royalty payments received in 2017 to make principal and interest
payments subject to quarterly caps set forth in the credit
agreement. Thereafter, subject to quarterly caps set forth in the
credit agreement, Halozyme Royalty will apply all of the royalty
payments received to repay outstanding principal and interest on
the loan. If royalty payments available to repay the loan are
insufficient to pay accrued interest due on any quarterly payment
date, the unpaid interest will be capitalized and added to the
outstanding principal balance of the loan. Royalty payments
received in excess of the quarterly caps will be retained by
Halozyme Royalty and distributed to Halozyme. Loan-related
expenses will be deducted from the royalty payments before such
amounts are applied to the loan or distributed to Halozyme
Royalty.
The final maturity date of the loan will be the earlier of (i)
the date when the principal amount and accrued interest are paid in
full, (ii) the termination of Halozyme Royalty's right to receive
royalties under the collaboration agreements with Roche and Baxalta
and (iii) December 31, 2050.
Repayment of the loan is the sole obligation of Halozyme Royalty
and is intended to be non-recourse to Halozyme Therapeutics, Inc.
and its other subsidiaries.
About Halozyme
Halozyme Therapeutics is a biotechnology company focused on
developing and commercializing novel oncology therapies that target
the tumor microenvironment. Halozyme's lead proprietary program,
investigational drug PEGPH20, applies a unique approach to
targeting solid tumors, allowing increased access of
co-administered cancer drug therapies to the tumor. PEGPH20 is
currently in development for metastatic pancreatic cancer,
non-small cell lung cancer, gastric cancer, metastatic breast
cancer and has potential across additional cancers in combination
with different types of cancer therapies. In addition to its
proprietary product portfolio, Halozyme has established
value-driving partnerships with leading pharmaceutical companies
including Roche, Baxalta, Pfizer, Janssen, AbbVie and Lilly for its
drug delivery platform, ENHANZE™, which enables biologics and small
molecule compounds that are currently administered intravenously to
be delivered subcutaneously. Halozyme is headquartered in
San Diego. For more information
visit www.halozyme.com.
Safe Harbor Statement
In addition to historical information, the statements set forth
above include forward-looking statements including, without
limitation, statements concerning the possible activity, benefits
and attributes of PEGPH20, the expected timing of consummation of
the royalty-based financing transaction, the anticipated timing and
amount of costs for clinical trials and expectations of the
company's funding levels that involve risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements. The forward-looking statements are
typically, but not always, identified through use of the words
"believe," "enable," "may," "will," "could," "intends," "estimate,"
"anticipate," "plan," "predict," "probable," "potential,"
"possible," "should," "continue," and other words of similar
meaning. Actual results could differ materially from the
expectations contained in forward-looking statements as a result of
several factors, including unexpected problems in satisfying
conditions to closing the royalty-based financing transaction,
unexpected expenditures and costs, unexpected results or delays in
development and regulatory review, regulatory approval
requirements, unexpected adverse events and competitive conditions.
These and other factors that may result in differences are
discussed in greater detail in Halozyme's most recent Quarterly
Report on Form 10-Q filed with the Securities and Exchange
Commission. Except as required by law, Halozyme undertakes no duty
to update forward-looking statements to reflect events after the
date of this release.
Contacts:
Jim
Mazzola
858-704-8122
ir@halozyme.com
Chris Burton
858-704-8352
ir@halozyme.com
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SOURCE Halozyme Therapeutics, Inc.