– $148.0 Million
(86%) of Existing Convertible Notes due in 2025 to be Exchanged for
$111.0 Million of New Convertible
Notes due in 2029 and Warrants –
– Issues New $100.0
Million Senior Secured Term Loan due in 2028 –
– Repays Principal Portion and Amends Royalty
Agreement with HealthCare Royalty –
NEWTON,
Mass., May 8, 2024 /PRNewswire/ -- Karyopharm
Therapeutics Inc. (Nasdaq: KPTI), a commercial-stage pharmaceutical
company pioneering novel cancer therapies, announced today that it
has entered into a series of financing transactions that will
extend the Company's debt maturities into 2028 and 2029, well
beyond the Company's planned Phase 3 data readouts in 2025.
"We are extremely pleased to have accomplished
several important objectives for Karyopharm and our shareholders
with this refinancing. We successfully strengthened our balance
sheet by extending the maturity of the vast majority of our debt
obligations well beyond the planned readouts and potential
approvals of our three ongoing Phase 3 programs," said Richard Paulson, President and Chief Executive
Officer of Karyopharm. "With the demonstrated strong commitment
from HealthCare Royalty and our top convertible note holders, we
have enhanced our ability to unlock the potential of
selinexor."
Convertible Notes Exchange
As part of these refinancing transactions, on
May 8, 2024, the Company entered into
privately negotiated agreements with certain funds managed by each
of Braidwell LP, Highbridge Capital Management, LLC, Davidson
Kempner Capital Management LP and Context Capital Management, the
top four holders of the Company's outstanding 3.0% Convertible
Notes due 2025 (the 2025 Convertible Notes) to exchange
approximately $148.0 million
aggregate principal amount out of the $172.5
million aggregate principal amount of the 2025 Convertible
Notes then outstanding for approximately $111.0 million aggregate principal amount of the
Company's newly issued 6.0% Convertible Notes due 2029 (the 2029
Convertible Notes), plus warrants to purchase up to approximately
46.0 million shares of the Company's common stock, at an
exercise price of $1.10 per share.
Exchanging holders will receive 2029 Convertible Notes having a
principal amount equal to 75% of the principal amount of 2025
Convertible Notes exchanged by them (i.e., $750 in principal amount of 2029 Convertible
Notes for each $1,000 in principal
amount of 2025 Convertible Notes surrendered in exchange). The 2029
Convertible Notes will be secured on a second-lien basis by the
same collateral that secures the Secured Term Loan.
The exchange transactions are anticipated to
close on or around May 13, 2024,
subject to customary closing conditions.
In addition, certain entities managed by
HealthCare Royalty Management, LLC (HCRx) will purchase
$5.0 million of the 2029 Convertible
Notes in satisfaction of $5.0 million
of the Company's existing obligations to HCRx. The 2029 Convertible
Notes will be convertible into shares of the Company's common stock
at the option of holders of the 2029 Convertible Notes at an
initial conversion rate of 444.4444 shares of the Company's common
stock per $1,000 principal amount of
the 2029 Convertible Notes (which is equivalent to an initial
conversion price of $2.25 per share,
a premium of approximately 105% above the closing price of the
Company’s common stock on May 7,
2024).
New $100.0
Million Senior Secured Term Loan
On May 8, 2024 (the
Term Loan Closing Date), the Company also entered into a new
$100.0 million first lien senior
secured term loan facility (the Secured Term Loan). The lenders
under the Secured Term Loan include certain holders of the 2025
Convertible Notes and HCRx, with existing holders of the 2025
Convertible Notes funding $85.0
million and HCRx funding $15.0
million through satisfaction of approximately $15.0 million of the Company's existing
obligations to HCRx. The Secured Term Loan matures in May 2028 and accrues interest at a rate of
Secured Overnight Financing Rate (SOFR) plus 9.25%. Amortization
payments will commence 24 months after closing.
Karyopharm intends to use $49.5 million of the proceeds from the Secured
Term Loan to repay royalty payment obligations owed to HCRx under
its existing Revenue Interest Financing Agreement (the Financing
Agreement), as described below, which, together with the
satisfaction of HCRx obligations through the delivery of
$5.0 million in 2029 Convertible
Notes and $15.0 million of the
Secured Term Loan to HCRx, will reduce the maximum amount owed to
HCRx thereunder to $128.3 million.
The remainder of the proceeds of approximately $30.0 million from the Secured Term Loan are
intended to be used to pay transaction expenses and for general
corporate purposes, including to support the Company's ongoing and
planned clinical trial activities.
Amended HealthCare Royalty Agreement
In addition, on the Term Loan Closing Date, the
Company entered into an amendment to the Financing Agreement with
HCRx pursuant to which the Company (i) made a $49.5 million cash payment to HCRx; (ii) agreed
to deliver a $15.0 million Secured
Term Loan note to HCRx in a cashless exchange of existing
obligations under the Financing Agreement with HCRx; (iii) agreed
to deliver $5.0 million of 2029
Convertible Notes to HCRx. Further, the royalty rate on
Karyopharm's worldwide net revenue of selinexor and any other
future products was reduced from a tiered schedule resulting in a
rate of 12.5% just prior to the Term Loan Closing Date to a flat
7.0%. The Financing Agreement with HCRx will be secured on a
second-lien basis.
The transactions described in this press release
are further described in a Current Report on Form 8-K to be filed
today with the U.S. Securities and Exchange Commission.
J. Wood Capital Advisors LLC acted as financial
advisor to Karyopharm and Wilmer Cutler
Pickering Hale and Dorr LLP acted as legal counsel to
Karyopharm in connection with these transactions.
This press release does not constitute an offer
to sell or the solicitation of an offer to buy the 2029 Convertible
Notes or any other securities, nor shall there be any offer,
solicitation or sale of the 2029 Convertible Notes or any other
securities (including the shares of Karyopharm's common stock
issuable upon conversion of the 2025 Convertible Notes, if any) in
any state or other jurisdiction in which such offer, solicitation
or sale would be unlawful.
Conference Call Information
Karyopharm will host a conference call on
May 8, 2024, at 8:00 a.m. Eastern Time, to discuss the first
quarter 2024 financial results, the transactions described herein
and other company updates. To access the conference call, please
dial (800) 836-8184 (local) or (646) 357-8785 (international) at
least 10 minutes prior to the start time and ask to be joined into
the Karyopharm Therapeutics call. A live audio webcast of the call,
along with accompanying slides, will be available under "Events
& Presentations" in the Investor section of the Company's
website, http://investors.karyopharm.com/events-presentations. An
archived webcast will be available on the Company's website
approximately two hours after the event.
About Karyopharm Therapeutics
Karyopharm Therapeutics Inc. (Nasdaq: KPTI) is a
commercial-stage pharmaceutical company whose dedication to
pioneering novel cancer therapies is fueled by a belief in the
extraordinary strength and courage of patients with cancer. Since
its founding, Karyopharm has been an industry leader in oral
compounds that address nuclear export dysregulation, a fundamental
mechanism of oncogenesis. Karyopharm's lead compound and
first-in-class, oral exportin 1 (XPO1) inhibitor, XPOVIO®
(selinexor), is approved in the U.S. and marketed by the Company in
three oncology indications. It has also received
regulatory approvals in various indications in a growing number of
ex-U.S. territories and countries, including Europe and the United Kingdom (as NEXPOVIO®) and China. Karyopharm has a focused pipeline
targeting indications in multiple high unmet need cancers,
including in multiple myeloma, endometrial cancer, myelofibrosis,
and diffuse large B-cell lymphoma (DLBCL). For more information
about our people, science and pipeline, please visit
www.karyopharm.com, and follow us on LinkedIn and on X at
@Karyopharm.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of The Private Securities Litigation
Reform Act of 1995. Such forward-looking statements include those
regarding the anticipated benefits of and activities under the
refinancing transactions, expectations for our use of proceeds from
the Secured Term Loan and our expected cash runway; the expected
closing date for the exchange transactions and the Company's
ability to complete the exchange transactions; expectations with
respect to commercialization efforts; the ability of selinexor to
treat patients with multiple myeloma, endometrial cancer,
myelofibrosis, diffuse large B-cell lymphoma, and other diseases;
and expectations with respect to the clinical development plans and
potential regulatory submissions of selinexor. Such statements are
subject to numerous important factors, risks and uncertainties,
many of which are beyond Karyopharm's control, that may cause
actual events or results to differ materially from Karyopharm's
current expectations. For example, there can be no guarantee that
Karyopharm will successfully commercialize XPOVIO or that any of
Karyopharm's drug candidates, including selinexor and eltanexor,
will successfully complete necessary clinical development phases or
that development of any of Karyopharm's drug candidates will
continue. Further, there can be no guarantee that any positive
developments in the development or commercialization of
Karyopharm's drug candidate portfolio will result in stock price
appreciation. Management's expectations and, therefore, any
forward-looking statements in this press release could also be
affected by risks and uncertainties relating to a number of other
factors, including the following: the adoption of XPOVIO in the
commercial marketplace, the timing and costs involved in
commercializing XPOVIO or any of Karyopharm's drug candidates that
receive regulatory approval; the ability to obtain and retain
regulatory approval of XPOVIO or any of Karyopharm's drug
candidates that receive regulatory approval; Karyopharm's results
of clinical trials and preclinical trials, including subsequent
analysis of existing data and new data received from ongoing and
future trials; the content and timing of decisions made by the U.S.
Food and Drug Administration and other regulatory authorities,
investigational review boards at clinical trial sites and
publication review bodies, including with respect to the need for
additional clinical trials; the ability of Karyopharm or its third
party collaborators or successors in interest to fully perform
their respective obligations under the applicable agreement and the
potential future financial implications of such agreement;
Karyopharm's ability to enroll patients in its clinical trials;
unplanned cash requirements and expenditures; development or
regulatory approval of drug candidates by Karyopharm's competitors
for products or product candidates in which Karyopharm is currently
commercializing or developing; the direct or indirect impact of the
COVID-19 pandemic or any future pandemic on Karyopharm's business,
results of operations and financial condition; and Karyopharm's
ability to obtain, maintain and enforce patent and other
intellectual property protection for any of its products or product
candidates. These and other risks are described under the caption
"Risk Factors" in Karyopharm's Annual Report on Form 10-K for the
year ended December 31, 2023, which was filed with the
Securities and Exchange Commission (SEC) on February 29, 2024,
and in other filings that Karyopharm may make with the SEC in the
future. Any forward-looking statements contained in this press
release speak only as of the date hereof, and, except as required
by law, Karyopharm expressly disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
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