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Subsequent events
12 Months Ended
Dec. 31, 2017
Subsequent Events [Abstract]  
Subsequent events

14. Subsequent Event

Acquisition of SafeOp Surgical, Inc.

On March 9, 2018, the Company announced its acquisition of SafeOp Surgical, Inc. (“SafeOp”). Under the term of the definitive merger agreement, the Company paid $15 million in cash, agreed to issued 3,265,132 shares of common stock, issued $3 million of convertible note that are convertible into 931,667 shares of common stock and issued warrants to purchase 2.2 million shares of common stock at an exercise price of $3.50 per share.  An additional 1,330,263 shares of common stock are issuable upon achievement of post-closing milestones.  

Private Placement

On March 8, 2018, the Company completed a $39.7 million first close of a $45.2 million private placement of its securities to certain institutional and accredited investors, including certain directors and executive officers of the Company.  The second close of the private placement is expected to occur within five business days.  The private placement was led by L-5 Healthcare Partners, an institutional investor, and provides for the sale by the Company of approximately 14.3 shares of newly created Series B Convertible Preferred Stock, which are automatically convertible into approximately 14.3 million  shares of common stock (representing a purchase price of $3.15 per common share), upon approval by Alphatec’s stockholders, as required in accordance with the NASDAQ Global Select Market rules. Purchasers also received warrants to purchase up to approximately 12.2 million shares of common stock at an exercise price of $3.50 per share.  In addition, the Company entered into an agreement with Armistice Capital, an existing investor, to exercise 2.4 million warrants to purchase common shares for gross proceeds of $4.8 million in exchange for warrants to purchase up to 1,800,000 shares of common stock at an exercise price of $3.50 per share.  The new warrants will be exercisable following approval by Alphatec stockholders, and will expire five years from the date of such stockholder approval.  Certain directors and executive officers of Alphatec agreed to purchase an aggregate of $6.4 million of shares of Series B Convertible Preferred Stock, which shares are convertible into approximately 2.1 million shares of common stock (representing a purchase price of $3.15 per common share), and warrants to purchase up to 1.7 million shares of common stock at a price of $3.50 per share.  The Company paid$15 million of the net proceeds from the private placement fund the cash purchase price for SafeOp, and will use the remaining net proceeds for working capital and general corporate purposes, including the integration of next-generation neuromonitoring solutions, advancement of its product pipeline, and investment in sales and marketing to expand our market presence.

Termination and Settlement of Elite Medical Holdings and Pac 3 Surgical Collaboration Agreement

In February 2018, the Company reached a settlement agreement with Elite Medical Holdings and Pac 3 Surgical, pursuant to which the Company made a cash payment of $0.4 million as the final and total compensation under the Collaboration and related Amendment.  In addition, the parties agreed to release each other and waive any and all rights and claims arising from the Collaboration Agreement.  The Company expects to record a gain of approximately $6.3 million for the three months ended March 31, 2018, reflecting the reversal of accrued obligations previously recorded under the Collaboration.  

Amendments to Credit Agreements

On March 8, 2018, we entered into we entered into a Seventh Amendment to the Amended Credit Facility with MidCap Funding IV, LLC and a Second Amendment to the Globus Facility Agreement to extend the date that the financial covenants of the respective agreements are effective from April 2018 to April 2019, and established a minimum liquidity covenant of $5.0 million through March 31, 2019.

 

Patent Infringement Lawsuit

On February 13, 2018, NuVasive, Inc. filed suit against us in the United States District Court for the Southern District of California, alleging that certain of our products (including components of the Squadron™ Lateral Retractor, the Battalion™ Lateral Spacer and other components of the Battalion™ Lateral System), infringe, or contribute to the infringement of, U.S. Patent Nos. 7,819,801, 8,355,780, 8,439,832, 8,753,270, 9,833,227 (entitled “Surgical access system and related methods”), U.S. Patent No. 8,361,156 (entitled “Systems and methods for spinal fusion”), and U.S. Design Patent Nos. D652,519 (“Dilator”) and D750,252 (“Intervertebral implant”) (collectively, the “NuVasive Patents”).  NuVasive is seeking unspecified monetary damages and a court injunction against future infringement by us.  We intend to vigorously defend ourselves in this matter, beginning by answering the complaint, denying the allegations and filing counterclaims seeking dismissal of NuVasive’s complaint and a declaration that we have not infringed and currently do not infringe any valid claim of the NuVasive Patents.  In addition, we may also seek the following relief: (i) a declaration that the NuVasive Patents are invalid; (ii) a permanent injunction against NuVasive charging that we have infringed or are infringing the NuVasive Patents; and (iii) costs and reasonable attorneys’ fees.  The case is in the very early stages of proceedings, with an order establishing a schedule for the case expected within the next few months.  As of the date of this Annual Report on Form 10-K, the probability of an outcome cannot be reasonably determined, nor can the Company reasonably estimate a potential loss; therefore, in accordance with Accounting Standards Codification 450, Contingencies, the Company has not recorded an accrual related to this litigation.