Flexion Therapeutics, Inc. (NASDAQ:FLXN) Files An 8-K Entry into a Material Definitive Agreement
Item1.01
| Entry into a Material Definitive Agreement. |
On May2, 2017, Flexion Therapeutics, Inc. (the Company) issued
$201,250,000 principal amount of its 3.375% Convertible Senior
Notes due 2024 (the Notes), including $26,250,000 aggregate
principal amount of Notes issued to the exercise in full by the
initial purchasers of the Notes (the Initial Purchasers) of their
over-allotment option to purchase additional Notes. The Company
estimates that the net proceeds from the offering of the Notes
will be approximately $195.0 million after deducting the discount
to the Initial Purchasers and estimated offering expenses payable
by the Company. The Company intends to use the net proceeds for
the commercialization and manufacture of Zilretta (also known as
FX006), if approved, product pipeline development, as well as
working capital and general corporate purposes. The Company may
also use a portion of the net proceeds to in-license, acquire or
invest in complementary businesses, technologies, products or
assets.
Indenture and the Notes
The Notes were issued to an Indenture, dated as of May2, 2017
(the Indenture), between the Company and Wells Fargo Bank,
National Association, as trustee. The Notes are general,
unsecured obligations of the Company. The notes will bear
interest at a rate of 3.375%per year, payable semiannually in
arrears on May1 and November1 of each year, beginning on
November1, 2017. The Notes will mature on May1, 2024, unless
earlier redeemed, repurchased or converted in accordance with the
terms of the Indenture. The Company may redeem, for cash, all or
any portion of the Notes, at its option, on or after May6, 2020
if the last reported sale price of its Common Stock has been at
least 130% of the conversion price then in effect for at least 20
trading days (whether or not consecutive), including the trading
day immediately preceding the date on which the Company provides
notice of redemption, during any 30 consecutive day trading
period ending on, and including the trading immediately preceding
the date on which the Company provides notice of redemption, at a
redemption price equal to 50% of the principal amount of the
Notes to be redeemed, plus accrued and unpaid interest to, but
excluding, the redemption date.
The Indenture includes customary terms and covenants, including
certain events of default after which the Notes may be due and
payable immediately. The following events are considered events
of default, which may result in acceleration of the maturity of
the Notes:
| 1. |
default in any payment of interest on any Note when due and payable and the default continues for a period of 30 days; |
| 2. |
default in the payment of principal of any Note when due and payable at its stated maturity, upon optional redemption, upon any required repurchase, upon declaration of acceleration or otherwise; |
| 3. |
the Companys failure to comply with its obligation to convert the Notes in accordance with the Indenture upon exercise of a holders conversion right, and such failure continues for a period of five business days; |
| 4. |
the Companys failure to provide notice of a fundamental change, a make-whole fundamental change or certain other specified corporate transactions, in each case when due; |
| 5. |
the Companys failure to comply with its obligations under the Indenture with respect to consolidations, mergers or sales of assets; |
| 6. |
the Companys failure for 60 days after written notice has been received by it from the trustee or by the Company and the trustee from the holders of at least 25% in principal amount of the Notes then outstanding to comply with any of the Companys other agreements contained in the Notes or the Indenture; |
| 7. |
the default by the Company or any of its significant subsidiaries with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $15,000,000 (or its foreign currency equivalent) in the aggregate of the Company and/or any such subsidiary, and such default |
| a. |
results in such indebtedness becoming or being declared due and payable or |
| b. |
constitutes a failure to pay the principal or interest of any such indebtedness when due and payable at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, if such default is not cured or waived, or such acceleration is not rescinded, within 30 days after notice to the Company by the trustee or to the Company and the trustee by holders of at least 25% in aggregate principal amount of the outstanding Notes; |
| 8. |
certain events of bankruptcy, insolvency, or reorganization of the Company or any of its significant subsidiaries; or |
| 9. |
a final judgment or judgments for the payment of $15,000,000 (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) in the aggregate rendered against the Company or any of its significant subsidiaries, which judgment is not discharged, bonded, paid, waived or stayed within 60 days after (i)the date on which the right to appeal thereof has expired if no such appeal has commenced, or (ii)the date on which all rights to appeal have been extinguished. |
If specified bankruptcy, insolvency or reorganization-related
events of default described in clause (8)above and further
specified in the Indenture occur, the principal of, and accrued
and unpaid interest on, all of the then-outstanding Notes will
automatically become due and payable. If an event of default
other than these bankruptcy, insolvency or reorganization-related
events of default occurs and is continuing, the trustee by notice
to the Company, or the holders of 25% or more in aggregate
principal amount of the Notes then outstanding by notice to the
Company and the trustee, may declare the principal of, and
accrued and unpaid interest on, all of the then-outstanding Notes
to be due and payable. Notwithstanding the foregoing, the
Indenture provides that, to the extent the Company elects, the
sole remedy for an event of default relating to certain failures
by the Company to comply with certain reporting covenants in the
Indenture will, for the first 360 days after such event of
default, consist exclusively of the right to receive additional
interest on the Notes.
The Notes are convertible at an initial conversion rate of
37.3413 shares of Common Stock per $1,000 principal amount of the
Notes, which is equivalent to an initial conversion price of
approximately $26.78 per share of Common Stock. The conversion
rate will be subject to adjustment upon the occurrence of certain
specified events but will not be adjusted for accrued and unpaid
interest. Upon conversion, the Company will satisfy its
conversion obligation by paying or delivering, as the case may
be, cash, shares of Common Stock or a combination of cash and
shares of Common Stock, at its election. If the Company satisfies
its conversion obligation solely in cash or through payment and
delivery, as the case may be, of a combination of cash and shares
of Common Stock, the amount of cash and shares of Common Stock,
if any, due upon conversion will be based on a daily conversion
value calculated on a proportionate basis for each trading day in
a 40 trading day observation period (as defined in the
Indenture).
Prior to the close of business on the business day immediately
preceding February1, 2024, holders of the Notes may convert all
or a portion of their Notes, in multiples of $1,000 principal
amount, only under the following circumstances:
|
during any calendar quarter commencing after the calendar quarter ending on June30, 2017 (and only during such calendar quarter), if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; |
|
during the five business day period after any ten consecutive trading day period (the measurement period) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; |
|
if the Company calls any or all of the Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; and |
| upon the occurrence of specified corporate events. |
On or after February1, 2024, until the close of business on the
business day immediately preceding the maturity date, holders may
convert their Notes at any time, regardless of the foregoing
circumstances.
Holders of the Notes who convert their Notes in connection with a
make-whole fundamental change (as defined in the Indenture) or a
notice of redemption are, under certain circumstances, entitled
to an increase in the conversion rate. Additionally, in the event
of a fundamental change (as defined in the Indenture), holders of
the Notes may require the Company to repurchase all or a portion
of their Notes at a price equal to 50% of the principal amount of
Notes, plus any accrued and unpaid interest to, but excluding,
the repurchase date.
A copy of the Indenture is attached hereto as Exhibit 4.1. The
description of the Notes contained in this Current Report is
qualified in its entirety by reference to the Indenture.
On April25, 2017, the Company issued a press release announcing
the proposed offering of the Notes. A copy of the press releaseis
filed herewith as Exhibit99.1.
On April26, 2017, the Company issued a press release announcing
the pricing of the offering of the Notes. A copy of the press
releaseis filed herewith as Exhibit99.2.
The Notes were sold to the Initial Purchasers in a private
placement in reliance on Section4(a)(2) of the Securities Act of
1933, as amended (the Securities Act) and offered for initial
resale by the Initial Purchasers to qualified institutional
buyers to the exemption from registration provided by Rule 144A
under the Securities Act. Neither the Notes nor any shares of
Common Stock issuable upon conversion of the Notes have been or
will be registered under the Securities Act or the securities
laws of any other jurisdiction, and may not be offered or sold in
the United States absent registration or an applicable exemption
from registration
requirements. This Current Report does not constitute an offer to
sell, or a solicitation of an offer to buy, any security and
shall not constitute an offer, solicitation or sale in any
jurisdiction in which such offering would be unlawful.
| Item2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
See Item1.01 above, which is incorporated by reference herein.
| Item3.02 | Unregistered Sales of Equity Securities. |
See Item1.01 above, which is incorporated by reference herein.
| Item8.01 | Other Events. |
In connection with the offering of the Notes, on April24, 2017,
the Company entered into a consent and amendment (the Amendment)
to that certain credit and security agreement, dated as of
August4, 2015 (the Credit Agreement), by and among the Company,
the lenders from time to time party thereto and MidCap Financial
Trust, as administrative agent. The Amendment, among other
things, provided the lenders consent to the issuance of the Notes
and amended certain covenants in the Credit Agreement to reflect
the issuance of the Notes and the Companys obligations under the
Indenture. The foregoing summary of the Amendment is not complete
and is qualified in its entirety by reference to the Amendment,
which is filed herewith as Exhibit 4.3.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking
statements, including statements related to the expected use of
proceeds from the offering of the Notes. Any statements contained
in this press release that are not statements of historical fact
may be deemed to be forward-looking statements. Words such as
intends, expects, will and similar expressions are intended to
identify forward-looking statements. Forward-looking statements
involve risks and uncertainties. The Companys actual results and
the timing of events could differ materially from those
anticipated in such forward-looking statements as a result of
these risks and uncertainties, which include risks and
uncertainties associated with the application of the net proceeds
from the offering of the Notes and changes in the Companys
business. The Company may continue to need additional funding and
may be unable to raise capital when needed, which could force the
Company to delay, reduce or eliminate its product development
programs and/or commercialization efforts. These and other risk
factors related to the Company and its business are discussed
under the heading Risk Factors in the Companys Annual Report on
Form 10-K, filed with the Securities and Exchange Commission on
March10, 2017. These forward-looking statements are based upon
the Companys current expectations. The Company expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in the Companys expectations with
regard thereto or any change in events, conditions or
circumstances on which any such statements are based, other than
as may be required under applicable law.
Item9.01. Financial Statements and Exhibits.
(d) Exhibits.
|
Exhibit Number |
Description |
|
| 4.1 |
Indenture, dated as of May 2, 2017, by and between the Company and Wells Fargo Bank, National Association, as trustee. |
|
| 4.2 |
Form of Note representing the Companys 3.375% Convertible Senior Notes due 2024 (included as Exhibit A to the Indenture filed as Exhibit 4.1). |
|
| 4.3 |
Consent and Second Amendment to Credit and Security Agreement, dated April 24, 2017, between the Company and MidCap Financial Trust, as administrative agent |
|
| 99.1 | Press release, dated April 25, 2017. | |
| 99.2 | Press release, dated April 26, 2017. |
About Flexion Therapeutics, Inc. (NASDAQ:FLXN)
Flexion Therapeutics, Inc. is a United States-based specialty pharmaceutical company. The Company is focused on the development and commercialization of local therapies for the treatment of patients with musculoskeletal conditions, beginning with osteoarthritis (OA), a type of degenerative arthritis. The Company’s lead product candidate, Zilretta, is a late-stage, injectable, extended-release, intra-articular (IA) investigational steroid. The Company is developing Zilretta as a treatment for patients with moderate to severe OA knee pain. The Company has specifically designed Zilretta to combine a steroid, triamcinolone acetonide (TCA) with poly lactic-co-glycolic acid (PLGA), for providing sustained therapeutic concentrations in the joint and persistent analgesic effect. The Company’s other product candidates include FX007 for post-operative pain and FX005 for the treatment of end-stage OA patients. The Company is engaged in conducting a Phase IIb clinical trial of Zilretta. Flexion Therapeutics, Inc. (NASDAQ:FLXN) Recent Trading Information
Flexion Therapeutics, Inc. (NASDAQ:FLXN) closed its last trading session down -1.29 at 19.72 with 723,551 shares trading hands.