Zevra Therapeutics Refinances Existing Debt with up to $100M in Committed Capital under New Credit Facility
- Zevra secures a significant $100M credit facility to support its rare disease therapeutics development.
- The facility includes an initial draw of $60M, with additional tranches available upon certain conditions.
- Zevra retires existing debt of approximately $43.1M, simplifying its financial structure.
- Net proceeds from the initial draw amount to approximately $14.0M after repayment of debt and associated expenses.
- The five-year credit facility bears interest at 12.33% per annum, allowing in-kind interest payments.
- The move aims to provide Zevra with financial flexibility and support its strategic priorities for 2024.
- Perceptive Advisors and Healthcare Royalty lead the new credit facility, emphasizing Zevra's growth potential.
- Zevra expects its cash runway to be extended into 2026 based on the current operating plan and available resources.
- None.
Insights
Zevra Therapeutics' new credit facility signals a strategic financial maneuver that could have significant implications for the company's liquidity and debt structure. The initial draw of $60 million, with subsequent tranches, provides Zevra with a substantial capital infusion. This move is designed to extend the company's cash runway, which is a vital indicator of a biotech firm's ability to sustain operations and invest in research and development without needing to raise funds through dilutive equity offerings.
The decision to retire existing debt simplifies the company's obligations and may improve its balance sheet attractiveness to investors. However, the interest rate, which includes a premium over the SOFR, reflects the higher risk associated with lending to a company in the volatile biotech sector. Investors should monitor the company's use of this capital, particularly its impact on the development of arimoclomol and other pipeline projects.
The financial backing by Perceptive Advisors and Healthcare Royalty is a vote of confidence in Zevra's pipeline, especially the potential of arimoclomol for treating Niemann Pick disease Type C (NPC). NPC is a rare and often fatal genetic disease, creating a high unmet medical need and a corresponding opportunity for Zevra. If arimoclomol is approved, it could provide significant revenue for the company.
However, the development and approval of new drugs are fraught with risk and success is not guaranteed. The company's strategic priorities for 2024 indicate a focus on commercialization and advancing its development programs, which are critical stages that require significant investment and carry substantial risk. The outcome of these efforts will likely have a profound impact on the company's financial health and stock price.
The involvement of specialized investment entities like Perceptive Advisors and Healthcare Royalty in the biotech sector often precedes pivotal growth stages for companies like Zevra. The structured credit facility with staged tranches suggests a performance-based approach, where subsequent capital injections are contingent on achieving certain milestones, such as the approval of arimoclomol.
Investors should consider the broader market context for rare disease therapies, which often command high prices and benefit from regulatory incentives. Zevra's focus on rare diseases positions it in a niche yet potentially lucrative market. The company's ability to meet its strategic goals, including the successful launch of its products, will be important for its market valuation and investor sentiment.
CELEBRATION, Fla., April 10, 2024 (GLOBE NEWSWIRE) -- Zevra Therapeutics, Inc. (NasdaqGS: ZVRA) (Zevra, or the Company), a rare disease therapeutics company, today announced that it has entered into a new credit facility provided by leading biotech investors. Led by Perceptive Advisors and Healthcare Royalty, the new credit facility provides up to
Net proceeds from the initial
The new five-year credit facility bears interest at the 3-month Secured Overnight Financing Rate (SOFR) (subject to a
“Entry into this new credit facility is another step in Zevra’s execution of our strategic vision to become a leading rare disease company,” said R. LaDuane Clifton, Zevra’s Chief Financial Officer, Secretary and Treasurer. “By restructuring the amounts previously outstanding on two different facilities, we have simplified and extended the maturity while also providing additional non-dilutive capital flexibility to support our strategic priorities for 2024, which are (i) successfully launching OLPRUVA® and ensuring access for patients, (ii) preparing for the launch of arimoclomol, if approved, and (iii) advancing our KP1077 development program in sleep disorders. As a result of this transaction, and based on our current operating plan, available cash, cash equivalents and investments, we expect that our cash runway will be further extended into 2026.”
“Zevra Therapeutics is in a unique position to build value through both its commercial and development assets,” said Sam Chawla, Portfolio Manager of Perceptive Advisors’ credit funds. “With multiple near-term catalysts, including a potential product approval later this year and upcoming development milestones, we are excited to support the Company and management team as they continue growing toward profitability.”
Founded in 1999, Perceptive Advisors focuses on supporting progress in the life sciences industry by identifying opportunities and directing financial resources toward the most promising technologies in modern healthcare. Today, the firm manages approximately
HealthCare Royalty (“HCRx”) is a leading royalty acquisition company focused on commercial or near-commercial stage biopharmaceutical products. HCRx has invested
Armentum Partners served as exclusive financial advisor to Zevra on the transaction. Latham and Watkins acted as legal advisor to Zevra. Moore & Van Allen acted as legal advisor for the Lenders. For more information regarding the financing and the applicable terms and conditions, please refer to the Current Report on Form 8-K filed today by Zevra with the Securities and Exchange Commission (SEC).
About Zevra Therapeutics
Zevra Therapeutics is a rare disease company combining science, data, and patient needs to create transformational therapies for diseases with limited or no treatment options. Our mission is to bring life-changing therapeutics to people living with rare diseases. With unique, data-driven development and commercialization strategies, the Company is overcoming complex drug development challenges to make new therapies available to the rare disease community.
For more information, please visit www.zevra.com or follow us on X (formerly Twitter) and LinkedIn.
Caution Concerning Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, including without limitation statements regarding the promise and potential impact of our preclinical or clinical trial data; the promise and potential impact of any of our products or product candidates for any specific disease indication or at any dosage; the potential approval and subsequent commercial launch of arimoclomol; the potential launch or commercialization of any of product candidates or products, including OLPRUVA, the sufficiency of our cash, cash equivalents and investments to fund our operating activities for any specific period of time, and our strategic and product development objectives, including with respect to becoming a leading, commercially focused rare disease company. Forward-looking statements are based on information currently available to Zevra and its current plans or expectations. They are subject to several known and unknown uncertainties, risks, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. These and other important factors are described in detail in the “Risk Factors” section of Zevra’s Annual Report on Form 10-K for the year ended December 31, 2023, and Zevra’s other filings with the Securities and Exchange Commission. While we may elect to update such forward-looking statements at some point in the future, except as required by law, we disclaim any obligation to do so, even if subsequent events cause our views to change. Although we believe the expectations reflected in such forward-looking statements are reasonable, we cannot assure that such expectations will prove correct. These forward-looking statements should not be relied upon as representing our views as of any date after the date of this press release.
Zevra Contact
Nichol Ochsner
+1 (732) 754-2545
nochsner@zevra.com
Russo Partners Contacts
Adanna G. Alexander, Ph.D.
+1 (646) 942-5603
adanna.alexander@russopartnersllc.com
Ignacio Guerrero-Ros, Ph.D.
+1 (646) 942-5604
ignacio.guerrero-ros@russopartnersllc.com
FAQ
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