Paratek Pharmaceuticals Receives $60 Million Non-Recourse Loan from R-Bridge Healthcare Investment Advisory, Ltd., an affiliate of CBC Group

Rhea-AI Summary

Paratek Pharmaceuticals (Nasdaq: PRTK) has announced a $60 million non-recourse loan from R-Bridge Healthcare to prepay its obligations to Hercules Capital. This loan is backed by royalties from its partnership with Zai Lab and U.S. net sales of NUZYRA, with a maturity of 12 years. Paratek expects a $6 million milestone payment from Zai Lab upon regulatory approval in China, anticipated in H1 2021. The loan offers greater financial flexibility, with the option to increase revenue interest rates and caps under specific conditions.

Positive

• The $60 million loan provides financial flexibility by extending repayment terms over 12 years.
• The loan is non-recourse except for specific revenue interests, minimizing financial risk.
• All milestone payments from Zai Lab are retained by Paratek, enhancing cash flow.

Negative

• The loan may increase revenue interest rates under certain conditions, possibly impacting future earnings.

Proceeds Used to Prepay Outstanding Loan with Hercules Capital, Inc.

BOSTON, Jan. 04, 2021 (GLOBE NEWSWIRE) -- Paratek Pharmaceuticals, Inc. (Nasdaq: PRTK), a commercial-stage biopharmaceutical company focused on the development and commercialization of novel life-saving therapies for life-threatening diseases or other public health threats for civilian, government and military use, today announced the Company entered into a $60 million non-recourse loan agreement with an affiliate of R-Bridge Healthcare Investment Advisory (the R-Bridge Loan) that will be repaid using all proceeds of royalties from the Company’s License and Collaboration Agreement with Zai Lab (Shanghai) Co., Ltd. (Zai Lab) and a 2.5% revenue interest from the Company’s U.S. net sales of NUZYRA with an annual cap of $10 million. The R-Bridge Loan has a maturity date of 12 years from the date of execution.

The net proceeds of the loan, together with cash on hand, was used to prepay in full all obligations outstanding under the Company’s Amended and Restated Loan and Security Agreement with Hercules Capital, Inc. (the Hercules Senior Secured Debt).

In May 2020, Zai Lab, announced its New Drug Application (NDA) for omadacycline for the treatment of community-acquired bacterial pneumonia (CABP) and acute bacterial skin and skin structure infections (ABSSSI) had been accepted with priority review in China. Upon Zai Lab’s regulatory approval, anticipated in the first half of 2021, Paratek will receive a $6.0 million milestone payment. All milestone payments under the Zai Lab License and Collaboration Agreement are excluded from the R-Bridge Loan and are retained by the Company.

Key Highlights

• The R-Bridge Loan is non-recourse to the Company other than the Zai Lab royalties and the U.S. NUZYRA revenue interest.
       - The maturity date extends the repayment and amortization period up to nine years beyond that of the now-retired Hercules Senior Secured Debt, providing greater financial flexibility for the Company.
       - Under certain circumstances, the revenue interest rate payable on the U.S. NUZYRA net sales may increase up to either 3.5% or 5% and the annual cap may increase from $10 million to $12 million.
       - All milestone payments under the License and Collaboration Agreement with Zai Lab are retained by the Company.
       - The loan may be prepaid in whole or in part at any time without premium or penalty.
• The Hercules Senior Secured Debt has been retired.

About Paratek Pharmaceuticals, Inc.
Paratek Pharmaceuticals, Inc. is a commercial-stage biopharmaceutical company focused on the development and commercialization of novel life-saving therapies for life-threatening diseases or other public health threats for civilian, government and military use.

The Company’s lead commercial product, NUZYRA^® (omadacycline), is a once-daily oral and intravenous antibiotic available in the U.S. for the treatment of adults with community-acquired bacterial pneumonia and acute bacterial skin and skin structure infections. Paratek has a License and Collaboration Agreement with Zai Lab for the development and commercialization of omadacycline in the greater China region and retains all remaining global rights.

Paratek exclusively licensed U.S. rights and rights to the greater China territory for SEYSARA^® (sarecycline), a once-daily oral therapy for the treatment of moderate to severe acne vulgaris, to Almirall, LLC (Almirall). Paratek retains the development and commercialization rights for sarecycline in the rest of the world.

In 2019, Paratek was awarded a contract from BARDA to support the development of NUZYRA for the treatment of pulmonary anthrax.

For more information, visit www.ParatekPharma.com or follow @ParatekPharma on Twitter.

About R-Bridge (CBC Group)
R-Bridge is a member of CBC Group (formerly known as C-Bridge Capital), one of the largest and most active healthcare-dedicated investment firms in Asia focused on platform-building, buyout opportunities, and alternative financing across three core areas: pharmaceutical & biotech, medtech, and healthcare services. CBC’s investment strategies empower healthcare sector champions to make transformative changes that enable sustainable long-term growth, fulfil unmet medical needs and continuously push the boundaries of innovation. Within CBC, R-Bridge is dedicated in providing alternative, non-dilutive financing backed by royalties, revenue interest and other cash flows generated by the sale of healthcare products and services in Greater China, the first of its kind for the asset class and the region. R-Bridge provides additional sources of capital to healthcare companies operating in China to continue their extraordinary growth trajectories, commercializing their products and services in China and on a global scale. Founded in 2014, CBC has a strong team of investment, healthcare and portfolio management professionals based across Singapore, Shanghai, Beijing, Hong Kong and New York. Currently, CBC manages over $2.7 billion of committed capital, including $300M managed by R-Bridge, and has a team of over 60 distinguished medical, investment and operations professionals focused on building the most trusted partner in China healthcare.

Forward Looking Statements
This press release contains forward-looking statements including statements related to our overall strategy, products, prospects, potential and expected results, including statements regarding the Company’s financial condition, borrowing terms, including recourse to the Company, expected regulatory approval of NUZYRA in China, anticipated milestone payments from Zai Lab, and royalties payable on the Company’s NUZYRA product. All statements, other than statements of historical facts, included in this press release are forward-looking statements, and are identified by words such as "advancing," "expect," "look forward," "anticipate," "continue," and other words and terms of similar meaning. These forward-looking statements are based upon our current expectations and involve substantial risks and uncertainties.  We may not actually achieve the plans, carry out the intentions or meet the expectations or projections disclosed in our forward-looking statements and you should not place undue reliance on these forward-looking statements.  Our actual results and the timing of events could differ materially from those included in such forward-looking statements as a result of these risks and uncertainties.  These and other risk factors are discussed under "Risk Factors" and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2019 and our other filings with the Securities and Exchange Commission.  We expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein.

CONTACT:

Investor and Media Relations:
Ben Strain
617-807-6688
ir@ParatekPharma.com

FAQ

What is the $60 million loan for Paratek Pharmaceuticals?

The loan is to prepay outstanding obligations to Hercules Capital, improving financial flexibility.

How will Paratek Pharmaceuticals repay the R-Bridge loan?

Repayment will come from royalties from Zai Lab and revenue from NUZYRA sales.

What milestone payment is Paratek expecting from Zai Lab?

Paratek is anticipating a $6 million milestone payment upon Zai Lab's regulatory approval in China.

What is the maturity date for the R-Bridge loan?

The R-Bridge loan has a maturity date of 12 years from its execution.

What are the implications of the R-Bridge loan on PRTK stock?

The loan provides financial flexibility but may increase revenue interest rates affecting future earnings.