- Total consideration of up to $45.75 million, which consists of upfront cash,
sales-based milestone payments and DRI Healthcare's assumption of
future milestone payment obligations
- HLS will use the upfront cash proceeds to pay down
debt
- 2024 revenue and Adjusted EBITDA guidance is updated to
reflect effective sale date of June 28,
2024
TORONTO, July 2, 2024
/CNW/ - HLS Therapeutics Inc. ("HLS" or the "Company") (TSX:
HLS), a pharmaceutical company focused on addressing unmet needs in
the treatment of psychiatric disorders and cardiovascular disease,
announces that it has sold its royalty interest and milestone
payment obligations in the global sales of XENPOZYME (olipudase
alfa) to DRI Healthcare Trust ("DRI Healthcare"), effective
June 28, 2024. All dollar amounts are
in U.S. dollars, unless otherwise stated.
The transaction is valued at up to $45.75
million, which consists of $13.25
million paid upfront in cash, $14.0
million in potential sales-based milestone payments and DRI
Healthcare's assumption of $18.5
million of potential future milestone payment obligations.
HLS will recognize revenue from its royalty interest in XENPOZYME
through June 30, 2024. The upfront
proceeds from the sale will be used to reduce the principal
outstanding on the Company's term loan. At current rates, the debt
repayment is expected to reduce annual interest expense by more
than $1.3 million.
"To strengthen our balance sheet and focus management efforts on
the growth of our product portfolio, we are divesting a
non-strategic asset," said Craig
Millian, CEO of HLS. "With the expectation that HLS would
have had to make a substantial milestone payment related to
XENPOZYME in 2025, we believe this is an ideal time to monetize
this royalty. This transaction generates significant value for the
Company, enabling us to accelerate de-leveraging, reduce our
interest expense, and enhance our future flexibility for the
productive use of capital."
Following this transaction, HLS is lowering its 2024 royalty
revenue guidance to a range of $1.5
to $1.7 million from the previous
range of $3 to $4 million. HLS will have a remaining royalty
interest in Takeda Pharmaceutical's OBIZUR, which is expected to
contribute between $0.5 million and
$0.7 million in 2024. Based on the
change in outlook for royalty revenue, guidance for total revenue
will be reduced to a range of $58.5
to $59.7 million from the previous
range of $60 to $62 million. Accordingly, the Company is lowering
its Adjusted EBITDA guidance to a range of $15.5 to $16.7
million from the previous range of $17 to $19
million.
During the second quarter, HLS also completed an amendment to
its credit agreement to ensure operating flexibility during this
transitional year. Based on financial covenants related to
liquidity and coverage ratios, opportunities to repurchase stock
under the NCIB program will be restricted in the near term.
ABOUT HLS THERAPEUTICS INC.
Formed in 2015, HLS is a pharmaceutical company focused on the
acquisition and commercialization of late-stage development,
commercial stage promoted and established branded pharmaceutical
products in the North American markets. HLS's focus is on products
targeting the central nervous system and cardiovascular therapeutic
areas. HLS's management team is composed of seasoned pharmaceutical
executives with a strong track record of success in these
therapeutic areas and at managing products in each of these
lifecycle stages. For more information visit:
www.hlstherapeutics.com
FORWARD LOOKING INFORMATION
This release includes forward-looking statements regarding
HLS, its business and the DRI Healthcare transaction. Such
statements are based on the current expectations and views of
future events of HLS's management. In some cases the
forward-looking statements can be identified by words or phrases
such as "may", "will", "expect", "plan", "anticipate", "intend",
"potential", "estimate", "believe" or the negative of these terms,
or other similar expressions intended to identify forward-looking
statements, including, among others, statements with respect to
HLS's expectations regarding the transaction with DRI Healthcare
and the potential benefits to the Company resulting from the
transaction; the Company's use of the proceeds from the
transaction, including the potential benefits resulting from a
reduction in the principal outstanding on the Company's term loan;
potential growth opportunities, options for the productive use of
capital and HLS's expectations regarding future financial
performance. The forward-looking events and circumstances discussed
in this release may not occur and could differ materially as a
result of known and unknown risk factors and uncertainties
affecting HLS, including risks relating to the specialty
pharmaceutical industry, risks related to the regulatory approval
process, risks related to HLS' ability to realize the full value of
the transaction with DRI Healthcare, economic factors and many
other factors beyond the control of HLS. Forward-looking statements
and information by their nature are based on assumptions and
involve known and unknown risks, uncertainties and other factors
which may cause HLS's actual results, performance or achievements,
or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statement or information. Accordingly, readers
should not place undue reliance on any forward-looking statements
or information. A discussion of the material risks and assumptions
associated with this release can be found in the Company's Annual
Information Form dated March 13,
2024, and Management's Discussion and Analysis dated
May 8, 2024, both of which have been
filed on SEDAR and can be accessed at www.sedarplus.ca.
Accordingly, readers should not place undue reliance on any
forward-looking statements or information. Except as required by
applicable securities laws, forward-looking statements speak only
as of the date on which they are made and HLS undertakes no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events,
or otherwise.
SOURCE HLS Therapeutics Inc.