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Subsequent Event
12 Months Ended
Dec. 31, 2013
Subsequent Event

18. Subsequent Event

In January 2014, Deerfield elected to convert an aggregate of $33.5 million of principal amount of the Tranche 2 Notes, pursuant to which the Company issued Deerfield 6,559,251 shares of the Company’s common stock. As a result of this election, Deerfield has fully exercised the conversion option under the 2019 notes by converting all of the Tranche 2 Notes, or $40.0 million of principal, into 7,852,475 shares of the Company’s common stock in the aggregate.

On February 28, 2014, the Company entered into a First Amendment to Facility Agreement and Registration Rights Agreement with Deerfield to provide for the issuance of tranche B notes to Deerfield in a maximum principal amount equal to (x) if the FDA approves the NDA for AFFREZZA and Deerfield purchased the fourth tranche of 2019 notes, 150% of the aggregate principal amount of the 2019 notes that Deerfield has converted into the Company’s common stock on and after the effective date of the amendment, up to $90.0 million, and (y) otherwise, 33.33% of the aggregate principal amount of the 2019 notes that Deerfield has converted into the Company’s common stock on and after the effective date of the amendment, up to $20.0 million, in each case subject to the satisfaction of certain other conditions. Any tranche B notes, if and when issued, would bear interest at the rate of 9.75% per year, subject to reduction to 8.75% if the Company enters into a collaboration with a third party to commercialize AFFREZZA, on the outstanding principal amount, payable in cash quarterly in arrears on the last business day of December, March, June and September of each year. The Company is required to repay 25% of the original principal amount of any tranche B notes on the third, fourth, fifth and sixth anniversaries of the applicable issue dates of such notes, provided that the entire outstanding principal amount of all tranche B notes will become due and payable no later than December 31, 2019. The tranche B notes will be prepayable without penalty or premium commencing two years after issuance thereof.

In addition, pursuant to the amendment, the outstanding 2019 notes held by Deerfield were amended and restated such that Deerfield may, subject to certain limitations, convert up to an additional $60.0 million principal amount under such 2019 notes into common stock after the effective date of the amendment. Pursuant to the amendment, the Company also amended its Registration Rights Agreement with Deerfield dated July 1, 2013 and agreed to register for resale up to 12,000,000 shares of common stock issuable upon conversion of the outstanding 2019 notes, as amended and restated, as of the date of the amendment, with a minimum conversion price of $5.00 per share unless the Company otherwise consents. The conversion price will be determined by the average of the volume weighted average prices per share during the three trading days immediately preceding the election to convert.

 

On March 3, 2014, the Company entered into two At-The-Market Issuance Sales Agreements (the “ATM Agreements”), one with MLV & Co. LLC (“MLV”), and one with Meyers Associates, L.P. (doing business as Brinson Patrick, a division of Meyers Associates, L.P.) (“Brinson Patrick”), pursuant to which the Company may issue and sell its common stock having aggregate sales proceeds of up to $50.0 million from time to time through MLV or Brinson Patrick, acting as the Company’s sales agents. The Company currently anticipates that all or substantially all sales of common stock under the ATM Agreements will be made in “at the market” offerings as defined in Rule 415 of the Securities Act of 1933, as amended. The Company has not yet sold or issued any shares of its common stock under the ATM Agreements.