Novelion Therapeutics Inc. (NASDAQ:NVLN) Files An 8-K Entry into a Material Definitive AgreementItem 1.01. Entry into a Material Definitive Agreement
On September22, 2017, Aegerion Pharmaceuticals,Inc. (“Aegerion”), an indirect, wholly-owned subsidiary of Novelion Therapeutics Inc. (the “Company”), entered into a series of agreements to resolve investigations being conducted by the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) regarding Aegerion’s U.S. commercial activities and disclosures related to JUXTAPID®(lomitapide) capsules (“JUXTAPID”). The terms of the settlement are substantially similar to the preliminary agreements in principle that Aegerion disclosed in a Current Report on Form8-K filed with the SEC on May11, 2016. Upon court acceptance of the proposed resolutions, Aegerion will become obligated under various agreements and judgments, including a plea agreement with the DOJ (“DOJ Plea Agreement”), a civil settlement agreement with the DOJ (“DOJ Civil Settlement Agreement”), separate civil settlement agreements with multiple U.S. states (“State Settlement Agreements”), a final judgment entered in connection with a complaint filed by the SEC (“SEC Judgment”), a three-year deferred prosecution agreement with the DOJ (“DPA”), a five-year corporate integrity agreement with the Office of Inspector General (“OIG”) of the Department of Health and Human Services (“CIA”), and a civil consent decree with the Food and Drug Administration (“FDA”) and the DOJ relating to the JUXTAPID Risk Evaluation Management Strategy (“REMS”) (“FDA Consent Decree”) (collectively, the “Agreements”). Aegerion has accrued an aggregate of $40.9 million for the payments to be provided to the DOJ and the SEC under the Agreements as of June30, 2017.
DOJ Plea Agreement
Under the DOJ Plea Agreement, Aegerion pled guilty to two misdemeanor misbranding violations of the Food, Drug and Cosmetic Act. The DOJ Plea Agreement requires Aegerion to pay a criminal fine in the amount of $6.2 million, to be paid in installments over three years, plus interest on any unpaid balance at a rate of 1.75% per annum. Aegerion agreed to pay, in the form of a forfeiture payment, an additional $1 million at the time the court accepts the DOJ Plea Agreement. The DOJ Plea Agreement also requires that the Company and Aegerion regularly review and certify compliance with the DOJ Plea Agreement and the FDA Consent Decree. In the event of any material change in Aegerion’s economic circumstances that might affect its ability to pay the fine, Aegerion must notify the court. In the event that Aegerion fails to satisfy its obligations under the agreement, Aegerion could be subject to additional criminal penalties or prosecution. The DOJ Plea Agreement is subject to approval by a U.S. District Court judge. The foregoing summary of certain terms of the DOJ Plea Agreement is qualified in its entirety by the terms of the DOJ Plea Agreement, which is filed as Exhibit10.1 to this Current Report on Form8-K.
DOJ Civil Settlement Agreement and State Settlement Agreements
Aegerion also entered into the DOJ Civil Settlement Agreement to resolve allegations by the DOJ that false claims for JUXTAPID were submitted to governmental healthcare programs. The DOJ Civil Settlement Agreement requires Aegerion to pay a civil settlement in the amount of $28.8 million, which includes $2.7 million designated for certain U.S. states relating to Medicaid expenditures for JUXTAPID, to be paid in installments over three years. Aegerion’s payment of this civil settlement amount is subject to acceleration in the event of certain change of control transactions or transfer of Aegerion’s rights in JUXTAPID or MYALEPT®(metreleptin) for injection (“MYALEPT”). The Civil Settlement Agreement is subject to approval by a U.S. District Court judge and may be terminated by Aegerion or the DOJ if Aegerion’s agreed-upon guilty plea to the DOJ Plea Agreement is not accepted by the Court, or the Court does not impose the agreed-upon sentence for whatever reason, or if the Court does not accept the DPA. In the event that Aegerion fails to satisfy its obligations under the agreement, Aegerion could be subject to additional penalties or litigation. The foregoing summary of certain terms of the DOJ Civil Settlement Agreement is qualified in its entirety by the terms of the DOJ Civil Settlement Agreement, which is filed as Exhibit10.2 to this Current Report on Form8-K.
Aegerion also agreed to enter into the State Settlement Agreements to resolve claims under state law analogues to the federal False Claims Act. The terms of the State Settlement Agreements are substantially similar to those set forth in the DOJ Civil Settlement Agreement. As noted above, participating states will receive up to $2.7 million in the aggregate from the $28.8 million amount paid to the DOJ Civil Settlement Agreement.
SEC Judgment
Aegerion also consented to the entry of the SEC Judgment without admitting or denying the allegations in the complaint related thereto. The complaint alleged negligent violations of Sections 17(a)(2)and (3)of the Securities Act of 1933, as amended, related to certain statements made by Aegerion in 2013 regarding the conversion rate for JUXTAPID prescriptions. The SEC Judgment provides that Aegerion must pay a civil penalty in the amount of $4.1 million, to be paid in installments over three years, plus interest on any unpaid balance at a rate of 1.75% per annum. Aegerion’s payment of this civil penalty is subject to acceleration in the event of certain change of control transactions or transfer of Aegerion’s rights in JUXTAPID or MYALEPT. Aegerion’s payment schedule is also subject to acceleration in the event that Aegerion fails to satisfy its payment obligations under the SEC Judgment. The SEC Judgment is subject to approval by a U.S. District Court judge. The foregoing summary of certain terms of the SEC Judgment is qualified in its entirety by the terms of the SEC Judgment, which is filed as Exhibit10.3 to this Current Report on Form8-K.
