DERMIRA, INC. (NASDAQ:DERM) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement
Credit Facility
On December 3, 2018 (the “Closing Date”), Dermira, Inc. (the “Company”) entered into a credit agreement (the “Credit Facility”), with Athyrium Opportunities III Acquisition LP (“Athyrium”). The Credit Facility provides for a senior secured term loan facility of up to $125 million in aggregate principal amount, $35.0 million of which was borrowed on the Closing Date (the “Initial Draw Loan”), $40.0 million of which may be borrowed in a single draw at the Company’s option on or before July 1, 2019 (the “First Delayed Draw Loan”), and $50.0 million of which may be borrowed in a single draw on or before March 2, 2020 provided that the Company’s consolidated net revenues from QBREXZA™ sales in the United States for the four fiscal quarter period then most recently ended, as calculated in accordance with the terms of the Credit Facility, were at least $45.0 million (the “Second Delayed Draw Loan” and collectively with the Initial Draw Loan and the First Delayed Draw Loan, the “Term Loan”).
Amounts outstanding under the Credit Facility bear interest at a rate of 10.75% per annum, payable in cash quarterly in arrears. After the occurrence and during the continuation of a default, amounts outstanding will bear interest at a rate of 13.75% per annum, payable in cash quarterly in arrears and on demand. Interest will be calculated on the basis of a year of 360 days, for the actual number of days elapsed. The Credit Facility provides for interest-only payments until December 3, 2023 (the “Maturity Date”), upon which the amounts outstanding must be repaid in full, provided, however, that if, as of February 13, 2022, the aggregate outstanding principal amount of the Company’s unsecured convertible senior notes issued to that certain Indenture, dated May 16, 2017, by and between the Company and U.S. Bank National Association, is greater than $60.0 million, the Company must immediately repay all amounts outstanding under the Term Loan, together with all accrued and unpaid interest and the applicable prepayment premium, if any (described below).
The Company may make voluntary prepayments in whole or in part, subject to (a) any prepayment being in a principal amount of $5.0 million or a whole multiple of $1.0 million in excess thereof, and (b) (i) a prepayment premium equal to, with respect to any prepayment paid on or prior to the second anniversary of the applicable borrowing date, the amount, if any, by which (A) (1) 105.0% of the principal amount prepaid plus (2) the present value at such prepayment date of interest which would have accrued on the amount of principal prepaid from the date of such prepayment through the second anniversary of the applicable borrowing date using a discount rate equal to the three-month Treasury Rate (as defined in the Credit Facility) plus 1.0% exceeds (B) the amount of principal prepaid, (ii) a prepayment premium equal to, with respect to any prepayment paid between the second and third anniversary of the applicable borrowing date, 3.0% of the principal amount of the Term Loan being prepaid, (iii) a prepayment premium equal to, with respect to any prepayment paid between the third and fourth anniversary of the applicable borrowing date, 1.0% of the principal amount of the Term Loan being prepaid, and (iv) with respect to any prepayment paid after the fourth anniversary of the Term Loan, no prepayment premium. Except as described above, the Company is not obligated to pay any final or exit fee upon prepayment or repayment of all or any of the borrowings under the Term Loan.
The Credit Facility also contains representations and warranties and affirmative and negative covenants customary for financings of this type as well as customary events of default. In addition, the Credit Facility contains a negative covenant requiring the Company to maintain at all times at least $15.0 million of consolidated cash and cash equivalents prior to the Second Delayed Draw Loan borrowing and, if applicable, at least $25.0 million of consolidated cash and cash equivalents upon and after the Second Delayed Draw Loan borrowing. Certain of the customary negative covenants limit the ability of the Company and certain of its subsidiaries, among other things, to incur future debt, grant liens, license certain property, make investments, make acquisitions, distribute dividends, make certain restricted payments and sell assets, subject to certain exceptions. Additionally, if applicable, upon and after the Second Delayed Draw Loan borrowing, the Company may not permit consolidated net revenues from QBREXZA™ sales in the United States to be less than (a) $15.0 million for any one fiscal quarter period ending during the period from January 1, 2020 through and including December 31, 2020, (b) $20.0 million for any one fiscal quarter period ending during the period from January 1, 2021 through and including December 31, 2021, and (c) $25.0 million for any one fiscal quarter period ending thereafter.
Upon execution of the Credit Facility, the Company paid a closing fee of $1.25 million. No warrants will be issued by the Company to Athyrium to the Credit Facility.
Security Agreement and Pledge Agreement
The Company’s obligations under the Credit Facility are secured by a security interest in, subject to certain exceptions, substantially all of the Company’s assets, to the terms of a security agreement, dated as of December 3, 2018 (the “Security Agreement”), and a pledge agreement, dated December 3, 2018 (the “Pledge Agreement”), each in favor of Athyrium.
The foregoing descriptions of the material terms of the Credit Facility, the Security Agreement and the Pledge
Agreement do not purport to be complete and are subject to, and are qualified in their entirety by, reference to the full text of the Credit Facility, the Security Agreement and the Pledge Agreement, each of which will be filed as exhibits to the Company’s Annual Report on Form 10-K for the year ending December 31, 2018.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above is incorporated into this Item 2.03 by reference.
Item 8.01 Other Events.
On December 4, 2018, the Company issued a press release announcing the transactions contemplated by the Credit Facility. A copy of the press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated into this Item 8.01 by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
Exhibit 99.1 Press release dated December 4, 2018
Dermira, Inc. ExhibitEX-99.1 2 derm-ex991_6.htm EX-99.1 – PRESS RELEASE derm-ex991_6.htm Exhibit 99.1 Dermira Enters into Credit Facility with Athyrium Capital Management – Facility provides additional financial flexibility in connection with ongoing QBREXZA launch and lebrikizumab program MENLO PARK,…To view the full exhibit click here
About DERMIRA, INC. (NASDAQ:DERM)
Dermira, Inc. is a biopharmaceutical company. The Company is focused on identifying, developing and commercializing differentiated therapies for dermatologic diseases. The Company’s portfolio includes three late-stage product candidates that target unmet needs and market opportunities, such as Cimzia (certolizumab pegol), DRM04 and DRM01. Cimzia is an injectable biologic tumor necrosis factor-alpha inhibitor, or TNF inhibitor, that is approved and marketed for the treatment of numerous inflammatory diseases spanning multiple medical specialties, including rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis and Crohn’s disease. DRM04 is a topical, small-molecule anticholinergic product for the treatment of hyperhidrosis. DRM01 is a topical, small-molecule sebum inhibitor for the treatment of acne.