Sarepta Therapeutics Prices $475 Million of Convertible Senior Notes Due 2024
November 08 2017 - 5:45PM
Sarepta Therapeutics, Inc. (NASDAQ:SRPT), a commercial-stage
biopharmaceutical company focused on the discovery and development
of precision genetic medicines to treat rare neuromuscular
diseases, today announced the pricing of $475 million aggregate
principal amount of convertible senior unsecured notes that will
mature on November 15, 2024. The notes are being offered and sold
only to qualified institutional buyers pursuant to Rule 144A under
the Securities Act of 1933, as amended. Sarepta has also granted
the initial purchasers of the notes an option to purchase up to an
additional $95 million aggregate principal amount of the notes,
solely to cover over-allotments. The sale of the notes to the
initial purchasers is expected to settle on November 14, 2017,
subject to customary closing conditions.
Concurrently with pricing of the offering,
Douglas Ingram, Sarepta’s president and chief executive officer,
purchased approximately $2 million of shares of Sarepta’s common
stock from certain purchasers of notes in privately negotiated
transactions effected through one or more of the initial purchasers
of the notes or their respective affiliates. The purchase price per
share of the common stock purchased by Mr. Ingram from certain
purchasers of notes was $52.44, the closing price per share of
Sarepta’s common stock on November 8, 2017.
The notes will bear cash interest at a rate of
1.50%, payable on May 15 and November 15 of each year, beginning on
May 15, 2018. The notes will not be redeemable prior to maturity.
The notes will be convertible, only during certain periods and
subject to certain circumstances, into cash, shares of Sarepta
common stock, or a combination of cash and shares of Sarepta common
stock, at Sarepta’s election. The initial conversion rate for the
notes is 13.6210 shares of Sarepta’s common stock per $1,000
principal amount of the notes, which is equivalent to an initial
conversion price of approximately $73.42 per share of Sarepta’s
common stock, representing an approximately 40% conversion premium
based on the last reported sale price of Sarepta’s common stock of
$52.44 per share on November 8, 2017.
Sarepta estimates that the net proceeds of the
offering will be approximately $421 million (or approximately $505
million if the initial purchasers’ over-allotment option is
exercised in full), after deducting the initial purchasers’
discounts and commissions and the net cost of the capped call
transactions (described below), but prior to deducting estimated
offering expenses. Sarepta intends to use the remainder of the net
proceeds from the offering to strengthen its balance sheet, improve
its capital structure and to fund general corporate purposes.
In connection with the pricing of the notes,
Sarepta also entered into privately negotiated capped call
transactions with one or more of the initial purchasers and/or
their respective affiliates and/or other financial institutions
(the “option counterparties”). The capped call transactions are
expected generally to reduce the potential dilution to Sarepta’s
common stock upon conversion of the notes and/or offset any cash
payments Sarepta is required to make in excess of the principal
amount of converted notes, as the case may be, in the event that
the market price per share of Sarepta’s common stock, as measured
under the terms of the capped call transactions, is greater than
the strike price of the capped call transactions, which initially
corresponds to the conversion price of the notes, and is subject to
anti-dilution adjustments substantially similar to those applicable
to the conversion rate of the notes. If, however, the market price
per share of Sarepta’s common stock, as measured under the terms of
the capped call transactions, exceeds the cap price of the capped
call transactions, there would nevertheless be dilution and/or
there would not be an offset of such potential cash payments, in
each case, upon conversion of the notes to the extent that such
market price exceeds the cap price of the capped call transactions.
The cap price of the capped call transactions will initially be
$104.88 per share, which represents a premium of 100% over the last
reported sale price of Sarepta’s common stock of $52.44 per share
on November 8, 2017, and is subject to certain adjustments under
the terms of the capped call transactions. If the initial
purchasers of the notes exercise their over-allotment option,
Sarepta expects to enter into additional capped call transactions
with the option counterparties.
Sarepta expects that, in connection with
establishing their initial hedges of the capped call transactions,
the option counterparties or their respective affiliates will
purchase shares of Sarepta’s common stock and/or enter into various
derivative transactions with respect to Sarepta’s common stock
concurrently with or shortly after the pricing of the notes. This
activity could impact the market price of Sarepta’s common stock or
the notes at that time. In addition, the option counterparties or
their respective affiliates may modify their hedge positions by
entering into or unwinding various derivative transactions with
respect to Sarepta’s common stock and/or by purchasing or selling
Sarepta’s common stock or other securities of Sarepta’s in
secondary market transactions following the pricing of the notes
and prior to the maturity of the notes (and are likely to do so
during any observation period related to a conversion of notes).
This activity could also impact the market price of Sarepta’s
common stock or the notes, which could affect the ability of
holders to convert the notes and, to the extent the activity occurs
during any observation period related to a conversion of the notes,
it could affect the number of shares of Sarepta’s common stock and
value of the consideration that holders will receive upon
conversion of the notes.
The offer and sale of the notes are not being
registered under the Securities Act, or any state securities laws.
The notes may not be offered or sold in the United States except
pursuant to an exemption from the registration requirements of the
Securities Act and any applicable state securities laws.
This news release does not constitute an offer
to sell or a solicitation of an offer to buy the securities
described herein, nor shall there be any sale of these securities,
in any state or jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the laws of such jurisdiction.
About Sarepta Therapeutics
Sarepta Therapeutics is a commercial-stage
biopharmaceutical company focused on the discovery and development
of precision genetic medicines to treat rare neuromuscular
diseases. The Company is primarily focused on rapidly advancing the
development of its potentially disease-modifying Duchenne muscular
dystrophy (DMD) drug candidates.
Forward-Looking
Statements
This press release contains forward-looking
statements, including but not limited to statements regarding the
estimated net proceeds of the offering and Sarepta’s anticipated
use of such net proceeds. These forward-looking statements involve
risks and uncertainties, many of which are beyond Sarepta’s
control, including but not limited to those related to whether or
not Sarepta will be able to consummate the offering and the capped
call transactions on the timeline or with the terms anticipated, if
at all. Applicable risks also include those that are included in
the “Risk Factors” section of Sarepta’s Quarterly Report on Form
10-Q for the three months ended September 30, 2017, in addition to
the risk factors that are included from time to time in Sarepta’s
subsequent SEC filings. Investors are cautioned not to rely on
these forward-looking statements when making an investment
decision. Any forward-looking statement in this press release
represents Sarepta’s views only as of the date of this press
release and should not be relied upon as representing its views as
of any subsequent date. Sarepta does not undertake any obligation
to publicly update its forward-looking statements based on events
or circumstances after the date hereof, except as required by
applicable law.
Source: Sarepta Therapeutics, Inc.
Media and Investors: Sarepta Therapeutics, Inc. Ian Estepan,
617-274-4052 iestepan@sarepta.com or W2O Group Brian Reid,
212-257-6725 breid@w2ogroup.com
Sarepta Therapeutics (NASDAQ:SRPT)
Historical Stock Chart
From Apr 2024 to May 2024
Sarepta Therapeutics (NASDAQ:SRPT)
Historical Stock Chart
From May 2023 to May 2024