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Subsequent Events
6 Months Ended
Jun. 30, 2020
Subsequent Events [Abstract]  
Subsequent Events Subsequent Events
Sixth Street Financing Agreement
In August 2020, the Borrowers, entered into the Sixth Street Financing Agreement, pursuant to which the Lenders agreed to extend a senior secured credit facility to the Company providing for term loans in an aggregate principal amount up to $500,000 plus any capitalized interest paid in kind. The facility consists of an initial term loan of $275,000, which the Borrowers borrowed at closing, and delayed draw term loans in an aggregate principal amount not exceeding $225,000, available until August 31, 2021, with $100,000 of the delayed draw term loans currently available at the Borrowers' option. The remaining $125,000 in delayed draw term loans becomes available if net sales from NURTEC ODT during the first quarter of 2021 or second quarter of 2021 equal at least $45,000. The facility terminates and the term loans become due and payable in August 2025.
Each term loan drawn under the facility will bear floating interest on the unpaid principal amount at a rate per annum equal to the three-month LIBOR rate, adjusted for applicable reserve requirements, and subject to a floor of 1.00%, plus 9.00%. Interest on amounts borrowed under the facility will be payable quarterly. For each borrowing under the facility, the Company has the right to elect to pay up to 4.00% of the interest on the term loans comprising such borrowing in the form of payment in kind for the first eight fiscal quarters after the date of such borrowing.
The Company will have the right to prepay borrowings under the facility in whole or in part at any time, subject to a customary prepayment fee on the principal amount being prepaid, which declines over time. In connection with the initial term loan of $275,000, the Company paid customary fees with respect to the initial term loan and delayed draw term loans at closing. The Company also agreed to pay customary fees on the funding of any delayed draw term loans. The net proceeds received from the initial term loan, after fees and expenses, was approximately $260,000.
The Sixth Street Financing Agreement contains mandatory prepayments, restrictions and covenants applicable to the Company and its subsidiaries that are customary for financings of this type. Among other requirements, the Borrowers will be required to maintain a minimum unrestricted cash balance of $50,000, which will increase to $80,000, commencing on the date that any portion of the remaining $225,000 delayed draw term loan is funded. The minimum unrestricted cash balance will be waived for any fiscal quarter in which the Borrowers achieve $400,000 of net sales of the Company’s products in the four consecutive quarterly periods prior to such fiscal quarter. The Sixth Street Financing Agreement also includes representations, warranties, indemnities and events of default that are customary for financings of this type, including an event of default relating to a change of control of the Company. Upon or after an event of default, the administrative agent and the lenders may declare all or a portion of our obligations under the Sixth Street Financing Agreement to be immediately due and payable and exercise other rights and remedies provided for under the Sixth Street Financing Agreement.
The obligations under the Sixth Street Financing Agreement are and will be guaranteed by each of the Company's existing and future direct and indirect subsidiaries, subject to certain exceptions. The obligations of the Company and its subsidiaries under the Sixth Street Financing Agreement are secured, subject to customary permitted liens and other agreed upon exceptions, by a security interest in certain existing and after-acquired assets of the Company and its subsidiaries.
2020 RPI Funding Agreement
In August 2020, the Company entered into the 2020 RPI Funding Agreement providing for up to $250,000 of funding in exchange for rights to participation payments based on global net sales of products containing zavegepant and NURTEC ODT and certain payments based on regulatory milestones relating to zavegepant. Under the 2020 RPI Funding Agreement, RPI 2019 IFT will be entitled to receive tiered, sales based participation rights up to 3.0% of future global net sales of products containing zavegepant, 0.4% of future global net sales of products containing NURTEC ODT, and payments tied to success-based milestones as described below. The Company will receive $150,000 at closing, which is expected to occur on or about August 11, 2020, and up to $100,000 upon achievement of certain development milestones for zavegepant (including the commencement of the oral zavegepant Phase 3 program).
If at any time during the 180 days following the closing of the 2020 RPI Funding Agreement, the Company enters into a definitive agreement to consummate a Change of Control, the Company will have the option to repurchase the participation rights and milestone payment rights for a purchase price of 2.0x of the amount received under the agreement at that date, contingent upon the closing of a Change of Control (the "Buy-Back Option").
The success-based milestone payments range from 0.6x to 2.95x of the funded amount depending on the number of regulatory approvals achieved for zavegepant (including 1.9x for the first zavegepant migraine regulatory approval) and would be paid over a ten-year period. If the Company consummates a Change of Control, and the Buy-Back Option has not previously been exercised, RPI 2019 IFT has the option to accelerate each unpaid milestone payment which has or thereafter occurs.
RPI Series B Preferred Share Purchase Agreement
In August 2020, in connection with the 2020 RPI Funding Agreement, the Company entered into a preferred share purchase agreement with RPI 2019 IFT in which RPI 2019 IFT agreed to purchase, subject to certain customary conditions, up to 3,992 Series B Preferred Shares, of no par value per share, at a price of $50,100 per preferred share from the Company (the "Series B Preferred Shares") for a total purchase price of $200,000, payable in quarterly installments of approximately$17,610 in 2021, $14,579 in 2022, and $8,905 in 2023 and 2024. In return, the Company will be required to redeem the Series B Preferred Shares in 24 quarterly installments of $14,773 from 2025 to 2030.
The holders of the Company's outstanding Series B Preferred Shares will have the right to require the Company to redeem their shares in certain circumstances. If the Company effects a Change of Control, the holders of the Series B Preferred Shares
will have the option to cause the Company to redeem, in a single payment any outstanding Series B Preferred Shares at a price equal to 1.78x the original issue price per share.
The Company may redeem any outstanding Series B Preferred Shares at its option at any time for 1.78x the original purchase price, with the redemption price to be paid in a single payment.
In the event that the Company defaults on any obligation to redeem Series B Preferred Shares when required, the redemption amount shall accrue interest at the rate of eighteen percent (18%) per annum. If any such default continues for at least one year, the holders of such shares shall be entitled to convert, subject to certain limitations, such Series B Preferred Shares into common shares, with no waiver of their redemption rights.
Under all circumstances, the Series B Preferred Shares are required to be redeemed by December 31, 2030.