PTC THERAPEUTICS, INC. (NASDAQ:PTCT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement
On May 5, 2017, PTC Therapeutics, Inc. (the Company) entered into
a credit and security agreement with MidCap Financial Trust, a
Delaware statutory trust (MidCap), as administrative agent and
MidCap and certain other financial institutions as lenders
thereunder (the Credit Agreement) that provides for a senior
secured term loan facility of $60.0 million, of which $40.0
million was drawn by the Company on May 5, 2017. The remaining
$20.0 million under the senior secured term loan facility will
become available to the Company upon its demonstration (on or
prior to December 31, 2018) of net product revenue equaling or
exceeding $120.0 million for the trailing 12 month period.
a credit and security agreement with MidCap Financial Trust, a
Delaware statutory trust (MidCap), as administrative agent and
MidCap and certain other financial institutions as lenders
thereunder (the Credit Agreement) that provides for a senior
secured term loan facility of $60.0 million, of which $40.0
million was drawn by the Company on May 5, 2017. The remaining
$20.0 million under the senior secured term loan facility will
become available to the Company upon its demonstration (on or
prior to December 31, 2018) of net product revenue equaling or
exceeding $120.0 million for the trailing 12 month period.
Interest Rate. Borrowings under the Credit Agreement bear
interest at a rate per annum equal to LIBOR (with a LIBOR floor
rate of 1.00%) plus 6.15%.
interest at a rate per annum equal to LIBOR (with a LIBOR floor
rate of 1.00%) plus 6.15%.
Amortization and Final Maturity. The Company is obligated to make
only interest payments (payable monthly in arrears) through April
30, 2019. Commencing on May 1, 2019 and continuing for the
remaining twenty-four months of the facility, the Company will be
required to make monthly interest payments and monthly principal
payments based on the straight-line amortization schedule set
forth in the Credit Agreement, subject to certain adjustments as
described therein. The final maturity date under the Credit
Agreement is May 1, 2021, unless earlier terminated.
only interest payments (payable monthly in arrears) through April
30, 2019. Commencing on May 1, 2019 and continuing for the
remaining twenty-four months of the facility, the Company will be
required to make monthly interest payments and monthly principal
payments based on the straight-line amortization schedule set
forth in the Credit Agreement, subject to certain adjustments as
described therein. The final maturity date under the Credit
Agreement is May 1, 2021, unless earlier terminated.
Mandatory Prepayments. The Credit Agreement requires the Company
to dedicate 50% of certain insurance proceeds to the prepayment
of outstanding term loans, subject to certain exceptions and net
of certain expenses and repayments.
to dedicate 50% of certain insurance proceeds to the prepayment
of outstanding term loans, subject to certain exceptions and net
of certain expenses and repayments.
Voluntary Prepayments. The Company may voluntarily prepay
outstanding loans under the Credit Agreement, in whole but not in
part, at any time upon 15 days written notice.
outstanding loans under the Credit Agreement, in whole but not in
part, at any time upon 15 days written notice.
Prepayment Fees. In connection with both mandatory and voluntary
prepayments, the Company will be required to pay a prepayment fee
equal to (i) 3.00% of the outstanding principal of such advance,
if the prepayment is made within twelve months of the date of
such advance, (ii) 2.00% of the outstanding principal of such
advance, if the prepayment is made between twelve months and
twenty-four months after the date of such advance or (iii) 1.00%
of the outstanding principal of such advance, if the prepayment
is made later than twenty-four months after the date of such
advance.
prepayments, the Company will be required to pay a prepayment fee
equal to (i) 3.00% of the outstanding principal of such advance,
if the prepayment is made within twelve months of the date of
such advance, (ii) 2.00% of the outstanding principal of such
advance, if the prepayment is made between twelve months and
twenty-four months after the date of such advance or (iii) 1.00%
of the outstanding principal of such advance, if the prepayment
is made later than twenty-four months after the date of such
advance.
Security. Subject to customary exceptions and exclusions, all
obligations under the Credit Agreement are secured to the terms
of the Credit Agreement, a Pledge Agreement between the Company,
certain subsidiaries of the Company and MidCap (the Pledge
Agreement), and an Intellectual Property and Security Agreement
between the Company and MidCap (the IP Security Agreement and
together with the Credit Agreement and the Pledge Agreement, the
Financing Agreements), each dated May 5, 2017. Under the
Financing Agreements, the Company provides to MidCap and the
other lenders:
obligations under the Credit Agreement are secured to the terms
of the Credit Agreement, a Pledge Agreement between the Company,
certain subsidiaries of the Company and MidCap (the Pledge
Agreement), and an Intellectual Property and Security Agreement
between the Company and MidCap (the IP Security Agreement and
together with the Credit Agreement and the Pledge Agreement, the
Financing Agreements), each dated May 5, 2017. Under the
Financing Agreements, the Company provides to MidCap and the
other lenders:
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a perfected, first-priority security interest in all of the
Companys personal property, including, without limitation, all of the Companys goods, accounts, equipment, inventory, contract rights or rights of payment of money, leases, license agreements, franchise agreements, commercial tort claims, documents, instruments, chattel paper, cash, deposit accounts, securities accounts, fixtures, letter of credit rights, securities, and all other investment property, supporting obligations, financial assets and all books and records related to the foregoing, subject to certain exceptions and limitations; |
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a perfected, first-priority security interest in all of the
Companys intellectual property (except that this security interest will not be perfected in intellectual property located outside the United States unless the Companys cash position falls below a pre-specified threshold), including, without limitation, any and all copyright rights, copyright applications, copyright registrations and like protection, trade secrets, design rights, patents, patent applications and like protections, trademark and servicemark rights, mask works or similar rights and any and all claims for damages, licenses or other rights, and proceeds and products related to the foregoing; and |
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a perfected, first-priority pledge of 65% of the equity
ownership interests directly held by the Company in PTC Therapeutics Holdings (Bermuda) Corp. Limited. |
Representations and Warranties and Certain Covenants. The Credit
Agreement contains certain customary representations and
warranties, affirmative covenants and conditions. The Credit
Agreement also contains a number of negative covenants that,
among other things and subject to certain exceptions and waivers,
restrict the Companys ability to:
Agreement contains certain customary representations and
warranties, affirmative covenants and conditions. The Credit
Agreement also contains a number of negative covenants that,
among other things and subject to certain exceptions and waivers,
restrict the Companys ability to:
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incur additional indebtedness;
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pay dividends on its capital stock or redeem, repurchase or
retire its capital stock or its other indebtedness, including subordinated indebtedness; |
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make investments, loans and acquisitions;
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engage in transactions with its affiliates;
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sell assets;
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materially alter the business it conducts;
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consolidate or merge;
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enter into any restrictive agreements;
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establish any new deposit accounts or security accounts not
subject to an account control agreement; |
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incur liens;
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make any significant change in accounting treatment or
reporting practices; and |
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amend, modify or waive certain material agreements (if the
effect on the Company or loans would be material) or its organizational documents. |
Further, the Credit Agreement contains financial covenants,
including a covenant that requires the Company to not have less
than $100.0 million of net product revenue (raised to $120.0
million if the additional $20.0 million term loan is issued) for
the trailing 12-month period, with compliance measured on the
last day of each fiscal quarter beginning on December 31, 2017.
including a covenant that requires the Company to not have less
than $100.0 million of net product revenue (raised to $120.0
million if the additional $20.0 million term loan is issued) for
the trailing 12-month period, with compliance measured on the
last day of each fiscal quarter beginning on December 31, 2017.
Events of Default.>The Credit Agreement contains various
events of default, including the following:
events of default, including the following:
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failure to make any payment of principal or interest under
the Credit Agreement when due; |
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failure to comply with any term contained in the Credit
Agreement or related documents; |
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making any incorrect representation, warranty,
certification or statement with respect to the Credit Agreement or related document; |
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failure to pay when due any other outstanding debt in the
excess of $1.0 million; |
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commencing a voluntary case or other proceeding, or having
such case or proceeding commenced against the Company, seeking liquidation, reorganization or other relief with respect to debts under any bankruptcy or insolvency; |
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terminating a pension plan if such termination results in
the requirement of to make contributions or incur a liability or obligation to such pension plan in the excess of $1.0 million; |
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one or more judgments or orders for the payment of money
not covered by insurance in the excess of $1.0 million; |
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any lien or collateral created under the Credit agreement,
Pledge Agreement or IP Security Agreement failing to constitute a valid lien; |
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any institution of governmental authority or criminal
proceeding against the Company; |
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an event of default occurring under any guarantee of any
portion of the Credit Agreement or related agreements; |
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any payments of any subordinated debt (other than
specifically permitted payments); |
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if the Companys common stock fails to remain publicly
traded and registered with a public securities exchange; |
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any event that results in the Company losing its marketing
authorization for Translarna in the European Economic Area; |
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the voluntary withdrawal or institution of any action or
proceeding by the FDA or similar governmental authority of any of the Companys material products or product category from the market or enjoining the Company from manufacturing, marketing, selling or distributing such product or product category; |
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cross defaults under or the early termination of any
material contract which such default or termination would reasonably be expected to result in a material adverse effect; |
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the Financing Documents or certain related documents fail
to constitute a valid and binding agreement; and |
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occurrence of any event that could reasonably be expected
to result in a material adverse effect. |
Upon the occurrence and during the continuance of an event of
default, MidCap may, and at the direction of a requisite
percentage of the lenders must, (i) suspend or terminate the term
loan commitment and Midcap and the other lenders obligations with
respect thereto, and (ii) by notice to the Company, declare all
or any portion of the obligations under the Credit Agreement to
be immediately due and payable.
default, MidCap may, and at the direction of a requisite
percentage of the lenders must, (i) suspend or terminate the term
loan commitment and Midcap and the other lenders obligations with
respect thereto, and (ii) by notice to the Company, declare all
or any portion of the obligations under the Credit Agreement to
be immediately due and payable.
Termination. In addition to MidCaps other rights and available
remedies, but subject to applicable cure periods, upon the
occurrence and during the continuance of an event of default,
MidCap may, and at the direction of a requisite percentage of the
lenders must, terminate the Credit Agreement.
remedies, but subject to applicable cure periods, upon the
occurrence and during the continuance of an event of default,
MidCap may, and at the direction of a requisite percentage of the
lenders must, terminate the Credit Agreement.
The Company may terminate the Credit Agreement upon fifteen days
prior written notice, following which all outstanding obligations
due thereunder shall be immediately due and payable.
prior written notice, following which all outstanding obligations
due thereunder shall be immediately due and payable.
Customary Fees. Additionally, in connection with the Credit
Agreement, the Company agreed to pay customary fees including an
origination fee, final payment exit fee and monthly
administration fees.
Agreement, the Company agreed to pay customary fees including an
origination fee, final payment exit fee and monthly
administration fees.
The foregoing summary of the Credit Agreement is not complete and
is qualified in its entirety by reference to the Credit
Agreement, the Pledge Agreement and the IP Security Agreement,
copies of which are filed as exhibits 10.1, 10.2 and 10.3,
respectively to this Current Report on Form 8-K (this Report) and
which are incorporated herein by reference.
is qualified in its entirety by reference to the Credit
Agreement, the Pledge Agreement and the IP Security Agreement,
copies of which are filed as exhibits 10.1, 10.2 and 10.3,
respectively to this Current Report on Form 8-K (this Report) and
which are incorporated herein by reference.
Item 2.02. Results of Operations and Financial Condition.
On May 8, 2017, the Company announced its financial results for
the quarter ended March 31, 2017. The full text of the press
release issued in connection with the announcement is furnished
as Exhibit 99.1 to this Report.
the quarter ended March 31, 2017. The full text of the press
release issued in connection with the announcement is furnished
as Exhibit 99.1 to this Report.
The information in this Item 2.02 on Form 8-K (including Exhibit
99.1) shall not be deemed filed for purposes of Section 18 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 a
filing.
99.1) shall not be deemed filed for purposes of Section 18 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 a
filing.
Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information set forth in Item 1.01 of this Current Report on
Form 8-K is incorporated herein by reference in this Item 2.03.
Form 8-K is incorporated herein by reference in this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
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(d)
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Exhibits.
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Exhibit No. Description
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10.1
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Credit and Security Agreement, dated May 5, 2017, by and
among PTC Therapeutics Inc., MidCap Financial Trust and the additional lenders thereto. |
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10.2
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Pledge Agreement, dated May 5, 2017, by and among PTC
Therapeutics Inc., each of the subsidiaries listed thereto as pledgers and MidCap Financial Trust. |
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10.3
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Intellectual Property Security Agreement, dated May 5,
2017, by and among PTC Therapeutics Inc. and MidCap Financial Trust. |
99.1 Press Release, dated May 8, 2017
About PTC THERAPEUTICS, INC. (NASDAQ:PTCT)
PTC Therapeutics, Inc. is a biopharmaceutical company focused on the discovery, development and commercialization of orally administered, small molecule therapeutics that focus on post-transcriptional control processes. The Company’s lead product, Translarna (ataluren), is used for the treatment of nonsense mutation Duchenne muscular dystrophy (nmDMD) in ambulatory patients with age of over five years and older. Its programs include Translarna for nonsense mutation cystic fibrosis (nmCF), Translarna for mucopolysaccharidosis type I caused by nonsense mutation (nmMPS I), Translarna for nonsense mutation aniridia, Translarna for nonsense mutation Dravet syndrome/CDKL5, Spinal muscular atrophy (SMA) in collaboration with Spinal Muscular Atrophy Foundation (SMA Foundation) and F. Hoffman-La Roche Ltd and Hoffman- La Roche Inc. (collectively Roche), and Cancer stem cell program (PTC596). It has two compounds in clinical development within the SMA program: RG7800 and RG7916. PTC THERAPEUTICS, INC. (NASDAQ:PTCT) Recent Trading Information
PTC THERAPEUTICS, INC. (NASDAQ:PTCT) closed its last trading session up +0.12 at 12.25 with 922,787 shares trading hands.
