WALTHAM, Mass. - Apellis Pharmaceuticals, Inc. (NASDAQ: NASDAQ:APLS) has secured a senior secured credit facility of up to $475 million with global investment firm Sixth Street, according to a statement released on May 14, 2024.
The biopharmaceutical company, known for developing therapies for challenging diseases, received $375 million at close and retains the option to access an additional $100 million prior to September 2025 upon meeting certain conditions.
The bulk of the initial proceeds, approximately $326 million, was utilized to buy out the company's existing development liability to SFJ Pharmaceuticals, eliminating $366 million in payments due through 2027. This strategic move frees Apellis from approximately $200 million in obligations through 2025. The transaction concludes with a net gain of around $32 million for Apellis after the buyout and associated transaction costs.
Tim Sullivan, Apellis' Chief Financial Officer, expressed that this deal positions the company to support its core operations to positive cash flow without needing capital market funds, marking a significant milestone for Apellis.
Jeff Pootoolal, a partner at Sixth Street, highlighted their support for Apellis, particularly for SYFOVRE® (pegcetacoplan injection), a treatment for geographic atrophy, which he noted has already benefited many U.S. patients in its first year.
The credit facility, maturing on May 13, 2030, is based on the 3-month Secured Overnight Financing Rate (SOFR) + 5.75%, with a 1.00% interest rate floor and includes customary covenants for such agreements. Apellis' obligations under the facility are secured by virtually all of its assets. As of March 31, 2024, the company reported having $325.9 million in cash and cash equivalents.
This financial maneuver follows Apellis' 2019 collaboration with SFJ Pharmaceuticals, which had provided $140 million to fund Phase 3 trials for pegcetacoplan in treating paroxysmal nocturnal hemoglobinuria (PNH). Following FDA and EMA approvals, Apellis was committed to paying SFJ $460 million in annual installments, with $94 million paid out as of the end of March 2024.
The credit facility's structuring advisors included TD Cowen as financial advisor and Wilmer Hale as legal counsel for Apellis, while Proskauer Rose LLP served as legal advisor for Sixth Street.
This financial development is based on a press release statement.
InvestingPro Insights
As Apellis Pharmaceuticals (NASDAQ: APLS) navigates through its strategic financial restructuring, InvestingPro data and insights provide a deeper understanding of the company's market position. With a market capitalization of $5.22 billion, Apellis reflects a significant presence in the biopharmaceutical industry. Despite not being profitable in the last twelve months, the company has seen a remarkable revenue growth of 394.93% over the same period, underlining its potential for future profitability.
The InvestingPro Tips highlight that analysts are optimistic about the company's sales growth in the current year, which aligns with the company's recent financial maneuvers to strengthen its position. Additionally, the fact that 5 analysts have revised their earnings upwards for the upcoming period further underscores the positive outlook on Apellis' financial future. However, it's worth noting that the company's stock has experienced a decline over the last month, reflecting a 16.95% decrease in price total return.
InvestingPro also points out that Apellis is trading at a high Price / Book multiple of 19.57, indicating that the market may be valuing the company's assets optimistically. This could be a reflection of the innovative therapies that Apellis is developing, such as SYFOVRE® for geographic atrophy. The company's liquid assets exceeding short-term obligations suggests a solid liquidity position, which is crucial for sustaining its research and development efforts.
For investors seeking more detailed analysis and additional InvestingPro Tips, including the company's moderate level of debt and its performance over the last five years, visiting the dedicated page for Apellis on InvestingPro could provide valuable insights. Furthermore, users can benefit from an additional 10% off a yearly or biyearly Pro and Pro+ subscription by using the coupon code PRONEWS24. With 9 additional tips listed on InvestingPro, investors can equip themselves with comprehensive data to make informed decisions.
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