Iroko Pharmaceuticals is a global specialty pharmaceutical company focused on developing and commercializing innovative treatment options for responsible pain management.
- Through a dynamic, collaborative approach—including the use of novel and proprietary technologies—Iroko develops and commercializes products that help patients manage their pain responsibly
- Iroko’s goal is to deliver value to patients, health care professionals, and other stakeholders
WAYNE, PA., Oct. 31, 2018 /PRNewswire/ — Today Egalet Corporation (OTCQX: EGLT) (“Egalet”), a fully integrated specialty pharmaceutical company focused on developing, manufacturing and marketing innovative treatments for pain, entered into an asset purchase agreement to acquire four marketed products from Iroko Pharmaceuticals, Inc. (Iroko). If consummated, the proposed transaction will enable Egalet to focus on marketing predominantly non-narcotic pain products. To facilitate this transaction and reorganize Egalet’s capital structure, Egalet has initiated proceedings under Chapter 11 of the United States Bankruptcy Code in the District of Delaware. As part of its restructuring, Egalet has filed a plan of reorganization (the “Plan”) that is supported by a majority in dollar amount of all classes of Egalet’s debt holders. The plan contemplates payment in full of all Egalet’s vendors and suppliers.
“Through this transaction, we will expand our commercial portfolio with four additional marketed, non-narcotic pain products while improving our capital structure,” said Bob Radie, president and chief executive officer of Egalet. “We believe that the acquisition of the Iroko assets will enable us to leverage our existing commercial infrastructure while driving efficiencies.”
Pursuant to the agreement, Egalet will acquire three FDA-approved, low-dose SoluMatrix® non-steroidal anti-inflammatory products, VIVLODEX® (meloxicam), TIVORBEX® (indomethacin), and ZORVOLEX® (diclofenac), as well as INDOCIN® (indomethacin) oral suspension and suppositories or capsules and SoluMatrix® naproxen, a phase 2 product candidate, from Iroko. As consideration for the acquisition, Egalet will issue to Iroko $45 million in new senior secured notes, 49% of the new Egalet common stock (a portion of which may be issued in the form of warrants) and a royalty payment based upon annual INDOCIN® net sales over $20 million. Upon the closing of the acquisition, Egalet management will continue to lead the company with the Iroko products integrated into the Egalet sales representatives’ product offerings. Egalet projects annual net revenue for all products, including the products to be acquired from Iroko, to be between $80 and $90 million.
The Iroko acquisition is conditioned upon the reorganization of Egalet under the Bankruptcy Code. Business will continue uninterrupted and operations will be supported by existing cash on hand. In advance of the Chapter 11 filing, over two-thirds in dollar amount of the company’s debt holders signed a restructuring support agreement which the company believes will facilitate an expeditious emergence from Chapter 11. As part of that agreement, Egalet will equitize its existing 5.50% and 6.50% convertible notes and a portion of its existing 13% senior secured notes. Through a combination of equity and cash, Egalet will, if the plan is approved, reduce its senior debt by $34 million to a total of $95 million in senior secured debt, comprised of the $45 million to be issued to Iroko and $50 million to be issued to Egalet’s existing 13.0% senior secured notes holders. In addition, the plan provides for the elimination of all Egalet’s outstanding equity securities, and the issuance of new Egalet common stock to Iroko and Egalet’s existing debt holders. The acquisition and the pre-arranged reorganization will require Bankruptcy Court approval. The company anticipates the closing of the acquisition of the Iroko assets and the bankruptcy will be completed in the first quarter of 2019.
“During the restructuring, and as we work to close the asset acquisition, we expect our business to continue uninterrupted with the Egalet products being marketed and shipped, our employees receiving wages and benefits and all of our vendors and suppliers receiving payments in the ordinary course of business going forward,” Mr. Radie added.
The company will look to relist on the Nasdaq market as soon as the company meets the applicable initial listing requirements. Egalet stock is expected to trade on the over-the-counter (OTC) on the Pink Sheets through the close of the transaction. Additional information on the transaction and filing will be contained in a report on Form 8-K, to be filed with the Securities and Exchange Commission.