Egalet sells $40 million of 13% four-year secured debt; debt purchasers buy royalty right

By Devika Patel

Knoxville, Tenn., Aug. 31 – Egalet Corp. said it settled a $40 million 13% secured debt offering.

The company may receive an additional $40 million if it receives approval from the U.S. Food and Drug Administration for Arymo ER, an abuse-deterrent morphine, by June 30.

Morgan Stanley & Co. LLC is the agent.

The debt is due on March 20, 2020, unless Arymo ER is approved by the FDA before June 30, in which case the maturity date will be Sept. 20, 2033.

Additionally, Egalet has sold a royalty right to the debt purchasers, through which they may receive a 1.5% royalty payment on the net sales of Sprix and Oxaydo. If Arymo ER is approved by the FDA by June 30, and the company settles the second tranche of debt, Egalet will sell a royalty right to the investors for a 1.5% royalty payment on the net sales of Arymo ER. The royalty will be paid semiannually until Dec. 31, 2019, unless Arymo ER is approved by the FDA by June 30, 2017, in which case the royalty will be paid until Dec. 31, 2020.

Proceeds will be used to repay all debt owed to Hercules Capital, Inc. under a loan agreement, for commercialization of Arymo ER, to develop of Egalet-002 and for general corporate purposes.

Wayne, Pa.-based Egalet is a specialty pharmaceutical company focused on developing pain treatments.

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