TetraLogic Pharmaceuticals Corporation (NASDAQ:TLOG) (“TetraLogic”
or “Company”), a clinical-stage biopharmaceutical company focused
on discovering and developing novel small molecule therapeutics in
oncology and infectious diseases, today announced that it has
entered into an asset purchase agreement with Medivir AB (Nasdaq
Stockholm:MVIR) (“Medivir”) to sell its SMAC mimetic program,
including its clinical stage asset birinapant, and its topical HDAC
inhibitor, SHAPE, to Medivir (the “Sale”).
In consideration Medivir is expected to pay $12
million in cash upon closing of the transaction as well as future
milestones of up to $153 million based on the development and
commercialization of TetraLogic’s product candidates and earn-out
payments which become payable upon achievement of specified annual
sales.
The transaction, which was approved by the Board
of Directors, is expected to close by the end of the fourth quarter
of 2016. Closing is subject to certain conditions, including
the approval of TetraLogic’s shareholders and of the holders of
TetraLogic’s convertible debt (“Senior Notes”).
In connection with the Sale, the holders of the
Senior Notes agreed to exchange $2.2 million in principal amount of
the Senior Notes for 12,222,222 shares of newly issued convertible
participating series A preferred stock, with certain preferential
dividends and liquidation preferences. Following this
exchange, approximately $41.5 million in aggregate principal amount
of Senior Notes will remain outstanding, plus accrued but unpaid
interest on all Senior Notes.
Each share of preferred stock will accrue
dividends at the rate of 8%, payable in priority to any dividend or
other distribution on the Common Stock. The preferred stock
will have voting rights equivalent to one share of the Company’s
common stock, par value $0.0001 per share (the “Common Stock”), and
will vote on an as-converted basis as a single class with the
holders of Common Stock.
The holders of Senior Notes have agreed to vote
their shares of preferred stock in support of the Sale.
Shareholders of the Company holding approximately 17.48% of the
outstanding shares of capital stock entitled to vote have signed
voting agreements in support of the Sale. Collectively
therefore, holders of shares representing approximately 50.72% of
the shares of capital stock entitled to vote will have agreed to
vote their shares in favor of the Sale.
Under its agreement with the holders of Senior
Notes, the Company has agreed to use the $12 million cash proceeds
received at closing of the Sale to redeem $12 million in aggregate
principal amount of the Senior Notes then outstanding. The
holders of the Senior Notes have also agreed to extend the maturity
date of the Senior Notes to June 15, 2024 and to receive interest
payments in additional Senior Notes in lieu of cash.
As a result of the Sale, the Company will be
terminating all remaining employees, with all terminations expected
to be completed no later than December 1, 2016.
On November 2, 2016, the Company received a
letter from The Nasdaq Stock Market LLC (“Nasdaq”) that it
determined to delist the Company’s Common Stock and that it will
suspend trading of the Company’s Common Stock effective at the open
of business on November 4, 2016.
The Company’s Board of Directors determined,
after careful consideration and in light of the Sale, that
voluntarily delisting and deregistering is in the overall best
interests of the Company and its shareholders. Factors that the
Board of Directors considered include the inability of the Company
to regain compliance with continued listing requirements of Nasdaq,
the costs associated with satisfying its ongoing reporting
obligations and the nominal trading price and limited trading
activity of its Common Stock.
In connection with the Sale, the Company is
submitting a notice to Nasdaq of its intention to voluntarily
delist its Common Stock, from The Nasdaq Global Market and to
deregister its Common Stock under Section 12(b) of the Securities
Exchange Act of 1934, as amended. The Company intends to file
a Notification of Removal from Listing and/or Registration on Form
25 with the Securities Exchange Commission (“SEC”) as soon as
permissible thereafter unless previously filed by Nasdaq and
expects that the Common Stock will cease to be listed on The Nasdaq
Global Market 10 days after the filing of Form 25.
The Company previously reported that it had
received notice from Nasdaq informing the Company that it was not
in compliance with (i) the minimum Market Value of Listed
Securities requirements set forth in Nasdaq Listing Rule
5450(b)(2)(A); (ii) the $1.00 Minimum Bid Price requirement as set
forth in Nasdaq Listing Rule 5450(a)(1); and (iii) the minimum $15
million market value of publicly-held shares requirement set forth
in Nasdaq Listing Rule 5450(b)(2)(C). Following a hearing
before the Nasdaq hearing panel (“Panel”) to
appeal a delisting determination by Nasdaq, the Company received
notice that the Panel granted the Company’s request for continued
listing on The Nasdaq Global Market subject to certain conditions,
including completion of a conversion of its Senior Notes into
equity of the Company by October 15, 2016 (the “Restructuring”).
On October 18, 2016, the Company received notice that the
Panel had granted the Company’s request for an extension till
October 31, 2016 for completion of the Restructuring.
Forward-Looking Statements
Some of the statements in this press release and
other written and oral statements made from time to time by
TetraLogic and its representatives are “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements include statements regarding the closing
of the Sale, the exchange of the Senior Notes into preferred stock,
cost savings and other benefits expected to be derived from the
delisting and deregistration and the intent and belief or current
expectations of TetraLogic and its management team. Such statements
may be identified by the use of words like “anticipate”, “believe”,
“estimate”, “expect”, “intend”, “may”, “plan”, “will”, “should”,
“seek”, the negative of these terms or other comparable
terminology. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ
materially from those projected in the forward-looking statements.
For example, there can be no assurances that TetraLogic will
successfully complete the Sale or the exchange of the Senior
Notes. Investors should read carefully the factors described
in the “Risk Factors” section of TetraLogic’s filings with the SEC,
including TetraLogic’s Form 10-K for the year ended December 31,
2015, for information regarding risk factors that could affect
TetraLogic’s results. The forward-looking statements contained in
this press release speak only as of the date of this press release
and TetraLogic undertakes no obligation to publicly update any
forward-looking statements to reflect changes in information,
events or circumstances after the date of this press release,
unless required by law.
Additional Information
This press release is being made in respect of
the Sale. The proposed Sale will be submitted to the shareholder of
the Company for their consideration. In connection with the
proposed Sale, the Company will file a proxy statement with the
SEC. This press release does not constitute a solicitation of
any vote or proxy from any shareholder of the Company. INVESTORS
ARE URGED TO READ THE PROXY STATEMENT CAREFULLY AND IN ITS ENTIRETY
WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS OR
MATERIALS FILED OR TO BE FILED WITH THE SEC OR INCORPORATED BY
REFERENCE IN THE PROXY STATEMENT, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE SALE. The final proxy statement
will be mailed to the Company’s shareholders. In addition, the
proxy statement and other documents will be available free of
charge at the SEC’s internet website, www.sec.gov. When available,
the proxy statement and other pertinent documents also may be
obtained free of charge at the Company’s website,
http://tetralogicpharma.com/, or by directing a written request to
TetraLogic Pharmaceuticals Corporation, Attn: Secretary, in
writing, at P.O. Box 1305, Paoli, PA 19301.
The Company and its directors, executive
officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies in
connection with the proposed Sale. Information about the
Company’s directors and executive officers is included in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2015 filed with the SEC on March 16, 2016 and the proxy
statement for the Company’s 2015 annual meeting of shareholders,
filed with the SEC on April 28, 2016. Additional information
regarding these persons and their interests in the transaction will
be included in the proxy statement relating to the proposed Sale
when it is filed with the SEC. These documents can be obtained free
of charge from the sources indicated above.
CONTACT:
Kevin Buchi
E-mail: Kevin.Buchi@tetralogicpharma.com
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