| Item 1.01 | Entry into a Material Definitive Agreement |
On December 28, 2018, Recro Pharma, Inc. (the “Company”) entered into a First Amendment to Credit Agreement and Investment Documents by and among the Company, certain of the Company’s subsidiaries named as guarantors therein (the “Guarantors”), the lenders named therein (the “Lenders”), and Athyrium Opportunities III Acquisition LP (“Athyrium”), in its capacity as the administrative agent (the “First Amendment”).
Pursuant to the First Amendment, the $20 million term B loan and $20 million term C loan provided for under the Company’s Credit Agreement dated November 17, 2017 by and among the Company, the Guarantors, the Lenders and Athyrium, which were contingent on the Company receiving regulatory approval of its intravenous meloxicam product candidate (“IV meloxicam”) by December 31, 2018, were restructured into (i) a $10 million termB-1 loan funded on December 28, 2018; (ii) a $15 million termB-2 loan (the “TermB-2 Loan”); and (iii) a $15 million term C loan (the “Term C Loan”).
The TermB-2 Loan may be drawn upon by the Company on or before September 30, 2019 provided that the Company (i) receives regulatory approval of IV meloxicam and (ii) has at least $20 million in unrestricted cash if the $5 million milestone payment due to Alkermes Pharma Ireland Limited (“Alkermes”) on or before April 23, 2019 (the “Alkermes Milestone Payment”) pursuant to the Company’s recently amended Purchase and Sale Agreement regarding the Company’s acquisition of the rights to IV meloxicam from Alkermes (the “Purchase Agreement”) has already been paid (if the Alkermes Milestone Payment has not been paid, the Company must have at least $25 million in unrestricted cash).
The Term C Loan may be drawn upon by the Company at any time on or prior to March 31, 2020 provided that the TermB-2 Loan has been drawn upon and net sales of IV meloxicam achieve $20 million for the most recent trailing twelve month period.
The First Amendment also provides that if, at the time of funding of the TermB-2 Loan, the Company (i) has not paid the next $5 million milestone payment under the Purchase Agreement due within 180 days of regulatory approval of IV meloxicam (the “Second Alkermes Milestone Payment”) and (ii) has less than $30 million in unrestricted cash, then the Company’s minimum liquidity covenant shall be increased from $7 million in unrestricted cash to $12 million in unrestricted cash, until the Second Alkermes Milestone Payment is made.
Pursuant to the First Amendment, the warrants to purchase an aggregate of 348,664 shares of the Company’s common stock, issued on November 17, 2017 to Athyrium and its Affiliate (the “Warrants”) were amended to decrease the exercise price of the Warrants to $6.84 per share, subject to adjustment as set forth therein.
In connection with the execution of the First Amendment, the Company paid Athyrium a $500,000 amendment fee as well as certain other fees and expenses, including the fees and expenses of Athyrium’s legal counsel.
The foregoing description of the First Amendment does not purport to be complete and is qualified in its entirety by the terms and conditions of the First Amendment, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
| Item 3.02 | Unregistered Sale of Equity Securities |
The information in Item 1.01 above with regard to the Warrants is incorporated in this Item 3.02 by reference. To the extent that the repricing of the Warrants constitutes an issuance of securities, the issuance is exempt under the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended.
| Item 3.03 | Material Modifications to Rights of Security Holders |
The information in Item 1.01 above with regard to the Warrants is incorporated in this Item 3.03 by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
