- New Aegerion loan facility, provided by
existing bondholders, strengthens balance sheet and is expected to
provide bridge to a potential comprehensive long-term capital
restructuring
Novelion Therapeutics
Inc. (NASDAQ:NVLN), a biopharmaceutical company
dedicated to developing new standards of care for individuals
living with rare metabolic diseases (“Novelion”),
announced that its subsidiary, Aegerion Pharmaceuticals, Inc.
(“Aegerion”), after soliciting third party lenders, has entered
into a new secured financing facility with certain funds managed by
Athyrium Capital Management (Athyrium) and Highbridge Capital
Management, LLC (Highbridge) (the “New Lenders”).
The facility consists of $50.0 million in new
secured first lien term loans that were funded to Aegerion in cash
and $22.5 million of new secured term loans that were used, on
behalf of Aegerion, to retire an equal amount of Aegerion’s 2%
convertible notes due August 2019, at par, held by certain funds
managed by each of Athyrium and Highbridge. Additionally,
approximately $21.2 million of the proceeds from the financing
facility were used by Aegerion to repay in full the indebtedness
outstanding under a secured loan facility entered into in March
2018, and $3.5 million of the proceeds from the financing facility
were used to repay, in part, the existing secured loan facility
made by Novelion to Aegerion. The remaining proceeds of
approximately $25.3 million from the new secured financing
facility, less approximately $3.5 million in fees and expenses
required to be paid by Aegerion in connection with such facility,
will be available to Aegerion for general corporate purposes.
Jeff Hackman, Interim Chief Executive Officer,
said, “The operational improvement and cost reduction initiatives
that we executed throughout 2018 have made an impact on the
stability of our business, and position Aegerion to become cash
flow positive by the second quarter of 2019. This financing, which
was sized to provide adequate runway to bridge to cash generation
at the Aegerion level, also sets us on a path to a more
comprehensive capital restructuring - our primary near-term goal.
We are encouraged by an ongoing productive dialogue with
Aegerion’s convertible debtholders to help us meet this goal, and
are pleased that some of our largest bondholders showed further
support for the Company by providing us with this new capital. As
always, we will strive to continue to serve our patients and ensure
that our important therapies continue to be made available to those
in need.”
Hondo Sen, a Partner at Athyrium, said, “We
believe that with a portfolio of important rare disease therapies
there is a fundamental business opportunity to pursue.”
Jonathan Segal, Managing Director and Portfolio
Manager at Highbridge, added, “We believe that through this
financing we can help bridge the Company to a comprehensive
long-term capital restructuring and allow it to take advantage of
that business opportunity.”
Aegerion has engaged Moelis & Company LLC
and AlixPartners, both of whom advised on the capital raise, to
continue the comprehensive review of Aegerion’s capital structure.
Novelion and Aegerion have also engaged Evercore and Moelis &
Company, respectively, to explore and advise the companies on all
available financial and strategic options, such as a restructuring
of Aegerion’s outstanding convertible notes (including a
restructuring that would likely involve a debt for equity swap), a
possible sale or merger of Novelion or Aegerion, or the sale or
other disposition of certain businesses or assets, including
territorial licensing deals. The New Lenders engaged Ducera
Securities LLC to advise on the capital raise.
The new facility has a maturity date of February
15, 2019, however, the maturity date may be extended, at Aegerion’s
option, to June 30, 2019 subject to the payment of a fee to the New
Lenders under the new facility, the delivery to such lenders of a
term sheet contemplating a sale of Aegerion or its assets that may
be acceptable to Aegerion and its board of directors, the
bring-down of certain representations and warranties of Aegerion,
and the satisfaction of certain other conditions. While the
funds received from the new facility allow the Company to meet its
immediate operational needs and obligations, Aegerion may not be
able to successfully refinance its approximately $36.8 million
secured loan from Novelion, its remaining approximately $302.5
million principal amount of 2.0% convertible senior notes due
August 15, 2019, or the new facility with an aggregate principal
amount of $72.5 million. Effecting such a refinancing, or
other wholesale recapitalization or other strategic alternative
(and some of these alternatives could potentially lead Novelion
and/or Aegerion to seek certain protections afforded under law,
including U.S. or Canadian bankruptcy codes) will be critical for
us to continue to execute on our commercial strategy and pursue our
goals and objectives, and we may not be successful in doing
so.
The new facility was unanimously approved by the
members of the board of directors of Novelion, all of whom are
independent, and a special committee of Aegerion’s board of
directors, comprised solely of independent directors, each of which
received advice from separate legal and financial advisors.
Financial Update
- Novelion expects total net product sales in 2018 to be between
$130 and $140 million and total net product sales in 2019 to be
between $145 and $160 million, with blended cash gross margins of
approximately 80% when adjusted for certain non-cash items, such as
amortization of intangible assets and inventory fair value step up
(non-GAAP). Following the operational expense cuts announced in
August 2018, including a 36% reduction in workforce which included
open or on-hold positions, Novelion expects Aegerion to achieve
positive cash flow by the second quarter of 2019, and positive
EBITDA in 2019, in each case, excluding any restructuring charges
and when adjusted for certain non-cash items, such as amortization
of intangible assets and debt discount and inventory fair value
step up.
- As of September 30, 2018, Novelion had approximately $27.4
million in cash on a consolidated basis, including $13.7 million at
Novelion and $13.7 million at the Aegerion subsidiary level.
After giving effect to the consummation of the new secured
financing by Aegerion as described above and the application of
proceeds from such financing and the payment of related fees and
expenses, Novelion and Aegerion are anticipated to have
approximately $15.7 million and $37.5 million, respectively, of
cash as of November 8, 2018.
Commercial Update
MYALEPT®/MYALEPTA® (metreleptin)
Jeff Hackman, Interim Chief Executive Officer,
continued, “Metreleptin remains the standard-of-care in the
treatment of generalized lipodystrophy (GL) as the only therapy
that addresses the underlying cause of this rare and serious
genetic disorder. Aegerion is focused on making this important
therapy more broadly available to this underserved patient
population, including in the EU. Aegerion is also working to expand
into new indications and markets, with a top near-term priority of
pursuing FDA approval of partial lipodystrophy (PL). With the
recent EU approval of MYALEPTA in this indication, Aegerion
believes that it has compelling data to support a potential U.S.
label expansion, which, if approved, would significantly increase
the size of MYALEPT’s addressable U.S. market.”
In addition:
- Aegerion plans to engage in dialogue with the U.S. Food and
Drug Administration (FDA) on a potential metreleptin sBLA filing
for PL in the U.S.
- In July 2018, the European Commission (EC) granted marketing
authorization for MYALEPTA (metreleptin). MYALEPTA is the first and
only licensed treatment in Europe indicated as an adjunct to diet
as a replacement therapy to treat the complications of leptin
deficiency in LD patients (which includes GL and PL).
Aegerion is pursuing pricing and reimbursement negotiations
with healthcare authorities on a country-by-country basis.
- Currently there are approximately 100 patients being treated
through expanded access programs and named patient sales in Europe,
the substantial majority of which have GL or PL. Upon, and subject
to, receipt of reimbursement approvals, Aegerion plans to convert
patients to commercial therapy, where possible.
- Metreleptin is also currently being sold in certain Latin
American countries via the named patient supply process, where
allowed, and Aegerion intends to pursue additional marketing
approvals for GL and PL in certain countries, including Brazil, in
2019. The Latin American markets represent a potential growth
opportunity, with a number of GL and PL patients already
identified.
JUXTAPID® (lomitapide)
Mr. Hackman continued, “With cash gross margins
in excess of 90% and positive cash flow, JUXTAPID continues to be
an important asset for Aegerion, and Aegerion is very pleased with
its improved commercial performance. Most notably, sales in the
U.S. appear to have stabilized, as some adult HoFH patients who
have failed to adequately respond to PCSK9 inhibitors return to
JUXTAPID due to its novel mechanism of action. In addition,
Aegerion expects sales growth from international markets, primarily
Japan, as Aegerion continues to execute on our commercial
strategy.”
In addition:
- Aegerion continues to expect growth in Japan, where there are
approximately 46 homozygous familial hypercholesterolemia (HoFH)
patients on therapy, and more than 200 HoFH patients registered in
the List of Intractable Diseases.
- Aegerion has filed for marketing authorization in Brazil for
HoFH in August 2018 and anticipates approval in the first half of
2019. In addition, we are currently preparing for commercial launch
in Argentina, where JUXTAPID has been approved. In the
meantime, Aegerion continues to provide therapy to HoFH patients
via the named patient supply process, where allowed.
Research and Clinical Development
Update
Lomitapide
- Aegerion is evaluating the possibility of developing lomitapide
for the potential treatment of familial chylomicronemia syndrome
(FCS) given recent developments in the FCS market. FCS is a
rare genetic disease that Aegerion believes affects approximately
one to two individuals per million. In 2011, the FDA granted
Orphan Drug Designation to lomitapide for the treatment of FCS, and
in 2012, the FDA indicated support of a potential filing based on a
single Phase 3 placebo-controlled study. Aegerion plans to
re-engage with FDA on a proposed development plan for FCS.
- Aegerion also believes there may be an opportunity to develop
lomitapide for the treatment of severe heterozygous familial
hypercholesterolemia (HeFH). JUXTAPID is currently only indicated
as an adjunct therapy for HoFH.
Metreleptin
- Metreleptin has potential clinical utility across a wide range
of indications associated with hypoleptinemic metabolic disorder
(HMD), including low-leptin obesity, hypoleptinemic nonalcoholic
steatohepatitis (PL NASH), and infertility associated with
hypothalamic amenorrhea. HMD is a spectrum of metabolic sequelae
secondary to underlying leptin deficiency. HMD patients
differ from epidemic “lifestyle” diseases such as common obesity,
type 2 diabetes mellitus/insulin resistance and dyslipidemia, in
that low leptin is the driver of the metabolic dysfunction.
- Clinical data from a metreleptin study assessing weight loss in
overweight and obese adults with low leptin levels was featured in
a poster presentation at the American Diabetes Association’s (ADA)
78th Scientific Sessions and showed that leptin replacement therapy
sustainably decreased weight over time in patients with low
baseline leptin levels.
Novelion and Aegerion’s ability to pursue these
clinical development activities, and to conduct a clinical trial of
metreleptin for PL, if required by the FDA as a requirement to
seeking approval of PL in the U.S., will require additional
funding, which, as noted above, may not be available.
Pro Forma Debt Outstanding of
Aegerion
After giving effect to the closing of the new
secured financing facility described above, as of November 8, 2018,
Aegerion has outstanding a total of approximately $411.8 million of
debt for borrowed money. This debt consists of $50.0 million
of first lien loans owing to certain funds managed by the New
Lenders that accrue interest at a per annum rate of 11% and mature
on February 15, 2019 subject to extension to June 30, 2019 as
described above, $36.8 million of loans owing to Novelion that
accrue interest at a per annum rate of 8.0% (8.5% beginning January
1, 2019) and mature on July 1, 2019, $22.5 million of loans owing
to certain funds managed by the New Lenders that accrue interest at
a per annum rate of 2% and mature on February 15, 2019 subject to
extension to June 30, 2019 as described above, and $302.5 million
of convertible notes that accrue interest at a per annum rate of 2%
and mature on August 15, 2019. Interest on all of the
outstanding debt of Aegerion (other than the convertible notes) is
payable in kind, and the next cash interest payment date for the
convertible notes is February 15, 2019.
Investor Presentation
As part of the business update, Novelion has
posted an updated investor presentation on its website at
https://ir.novelion.com/events-and-presentations.
About Novelion Therapeutics
Novelion, through Aegerion, is a global
biopharmaceutical company dedicated to developing and
commercializing therapies that deliver new standards of care for
people living with rare and underserved metabolic diseases. Our
goal is to develop and bring to market transformational therapies
that have the potential to significantly change the treatment
paradigm for patients affected by a variety of rare and metabolic
diseases, including diseases associated with low leptin, such as
low-leptin associated obesity. 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.
Novelion is the parent company of Aegerion, our
operating subsidiary. References to “we,” “our” and the
“Company” refer to the entire enterprise, whose assets and
operations reside at Aegerion.
Non-GAAP (“pro forma”)
Results
The non-GAAP results in this press release,
including, without limitation, blended cash gross margins, are
provided as a complement to results provided in accordance with
GAAP because management believes, when considered together with the
GAAP information, these non-GAAP financial measures help indicate
underlying trends in the Company's business, are important in
comparing current results with prior period results and provide
additional information regarding the Company’s financial
performance. Management also uses these non-GAAP financial measures
to establish budgets and operational goals that are communicated
internally and externally, and to manage the Company's business and
evaluate its performance. The non-GAAP financial measures have no
standardized meaning under GAAP and therefore may not be comparable
to similar measures presented by other companies. The non-GAAP
financial measures are not intended to be considered in isolation
or as a substitute for, or superior to, the financial measures
prepared and presented in accordance with GAAP and should be
reviewed in conjunction with the relevant GAAP financial
measures.
Forward Looking Statements
Certain statements in this press release
constitute "forward-looking statements" within the meaning of
applicable laws and regulations and constitute "forward-looking
information" within the meaning of applicable Canadian securities
laws. Any statements contained herein which do not describe
historical facts, including statements regarding beliefs that the
new Aegerion loan facility strengthens the balance sheet;
expectations that the new Aegerion loan facility will provide a
bridge to a potential comprehensive long-term capital
restructuring; statements about the terms of the new financing and
expectations regarding use of such funds and the opportunity it
provides; beliefs about the impact of our cost reduction measures
and the stability of our business; expectations regarding
Novelion’s and Aegerion’s review of financial and strategic
alternatives, including a restructuring of Aegerion and a potential
debt for equity swap; beliefs about our operational improvement and
cost-reduction initiatives, and as to the ability of Novelion or
Aegerion to execute on our commercial strategy and goals;
expectations for engagement with Aegerion’s convertible note
holders; beliefs about product sales, blended cash gross margins,
cash flow and EBITDA, including the timing for achieving positive
cash flow and EBITDA (and that positive cash flow and EBITDA are
achievable); commercial plans for Myalept and Juxtapid, including
market expansion, U.S. and ex-U.S. regulatory filings and
milestones, commercial launch preparations overseas, pricing and
reimbursement negotiations and patient conversion initiatives;
expectations that the Latin American markets represent a potential
growth opportunity for Myalept; plans for research and development
initiatives for lomitapide and metreleptin, including development
plans and beliefs for FCS and severe HeFH for lomitapide, as well
as plans and beliefs for HMD and the clinical utility of
metreleptin across a wide range of indications associated with HMD;
beliefs about data, including that Aegerion has compelling data to
support a potential U.S. label expansion for Myalept, and
development plans based lomitapide FCS data; beliefs about the
market and market opportunities for Myalept and Juxtapid; beliefs
that Juxtapid sales have stabilized; expected international sales
growth for Juxtapid, including in Japan; and beliefs about the FCS
market 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; the possibility that
the terms of the new loan facility and its restrictions could have
a negative impact on our business and our shareholders (whose
interests may not be aligned with those of Aegerion’s bond
holders); whether Novelion and/or Aegerion will be able to
undertake a wholesale recapitalization, which is likely to include
a debt for equity swap, and Novelion and/ or Aegerion may be forced
to use the protections of the bankruptcy code to effectuate such
recapitalization or other alternative; Novelion’s and Aegerion’s
ability to identify, pursue and consummate any financial or
strategic alternatives; Novelion’s ability to maintain its listing
status on Nasdaq; Novelion’s and Aegerion’s ability to continue as
a going concern; the risks inherent in the development and
commercialization of pharmaceutical products; as well as those
risks identified in Novelion’s filings with the U.S. Securities and
Exchange Commission (the “SEC”), including under the heading “Risk
Factors” in our Annual Report on Form 10-K filed on March 16, 2018,
and subsequent filings, with the SEC (including Novelion’s upcoming
Quarterly Report on Form 10-Q for the quarter ended September 30,
2018 and Novelion’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2018), available on the SEC’s website at
www.sec.gov. Any such risks and uncertainties could
materially and adversely affect our results of operations, cash
flows, and our ability to maintain our operations, any of which
would have a significant and adverse impact on our stock price. 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.
This press release also contains
“forward-looking information” that constitutes “financial outlooks”
within the meaning of applicable Canadian securities laws. This
information is provided to give investors general guidance on
management’s current expectations of certain factors affecting our
business, including our financial results. 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 our company
website www.novelion.com, including, but not limited to, company
disclosures, investor presentations and FAQs, SEC filings, press
releases, public conference calls 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.
CONTACT:
Amanda Murphy, Director, Investor Relations & Corporate
CommunicationsNovelion
Therapeutics857-242-5024amanda.murphy@novelion.com
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