Novelion Therapeutics Inc. (NASDAQ:NVLN) Files An 8-K Regulation FD DisclosureItem 7.01 Regulation FD.
A copy of the press release announcing the results of the hearing described under Item 8.01 below is furnished with this report as Exhibit99.1.
Exhibit99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 8.01. Other Events.
As previously disclosed in a Current Report on Form8-K filed by Novelion Therapeutics Inc. (“we,” “us” or the “Company”) on September22, 2017 (the “Prior Report”), Aegerion Pharmaceuticals,Inc. (“Aegerion”), an indirect, wholly-owned subsidiary of the Company, entered into a series of agreements (the “Settlement”) to resolve investigations (the “Investigations”) being conducted by the Department of Justice (“DOJ”) and the Securities and Exchange Commission (the “SEC”) regarding Aegerion’s U.S. commercial activities and disclosures related to JUXTAPID®(lomitapide) capsules (“JUXTAPID”), certain terms of which were and are subject to acceptance by the U.S. District Court, including the plea agreement with the DOJ (“DOJ Plea Agreement”), under which Aegerion agreed to plead guilty to two misdemeanor misbranding violations of the Food, Drug and Cosmetic Act.
On January30, 2018, a U.S. District Court judge sentenced Aegerion after accepting Aegerion’s guilty criminal plea. The terms of the sentence are identical, in terms of monetary impact to the Company, to the terms recommended by the DOJ and Aegerion in the DOJ Plea Agreement, which were previously disclosed in the Prior Report. The Court did not impose a criminal fine and instead established a restitution fund in the amount of $7.2 million, which includes administration costs, to be paid in installments over three years, plus interest on any unpaid balance at a rate of 1.75% per annum. As contemplated by the DOJ Plea Agreement, the Court put Aegerion on probation for three years and required Aegerion to not waste, or without permission of Aegerion’s probation officer, sell, assign or transfer its assets.
Of the agreements that comprise the Settlement, the DOJ Civil Settlement Agreement and the Consent Decree for the JUXTAPID REMS Program are still subject to approval by separate U.S. District Court Judges. If these Settlement documents are finally approved as proposed, Aegerion would be required to pay an approximately $40.1 million aggregate penalty to be paid over three years, which, in addition to the restitution described above, includes a civil penalty of $4.1 million to be paid to the SEC to the SEC Judgment, and $28.8 million, including $2.7 million designated for certain states, to be paid to the DOJ Civil Settlement Agreement. As part of the Settlement, Aegerion also has entered into a five-year corporate integrity agreement (“CIA”) with the Department of Health and Human Services, a three-year Deferred Prosecution Agreement (“DPA”) with the DOJ, and a five-year Consent Decree for the JUXTAPID REMS Program.
to the Settlement, Aegerion is also required to implement various remedial and compliance measures, which could negatively impact our results of operations, as such efforts will require Aegerion to expend significant costs and resources and will divert those resources from investing in the commercialization of our products and other potential development and growth initiatives. Further, Aegerion has no experience in complying with a settlement of this type and magnitude and may be unsuccessful in implementing all of the elements of the Settlement in a timely or satisfactory manner, or at all. Failure to comply with any provisions of the Settlement could result in the imposition of additional fines, penalties and obligations by the applicable government agency, and could subject Aegerion to prosecution.
For example, the CIA, which has taken effect, requires Aegerion, among other things, to: maintain a compliance program that includes comprehensive written policies and procedures and appropriate conduct related to sales, marketing, reimbursement, incentive compensation and other matters; conduct training and education regarding the compliance program and requirements of the CIA; conduct an independent review and analysis of Aegerion’s systems, transactions, risk assessment and mitigation process and other compliance activities; maintain a disclosure program that allows individuals to report issues or questions associated with Aegerion’s policies, conduct, practices or procedures; have a field force monitoring program to evaluate and monitor sales personnel’s interactions with healthcare professionals; monitor non-promotional activities, including consultants, donations to independent third-party patient assistance programs and other types of grants; have certain