Epix Saga Continues with Sale of Imaging-Drug Rights, Exchange Offer
Epix Pharmaceuticals (NASDAQ:EPIX), a Lexington, MA-based biotech firm struggling to survive, has revealed two separate deals today—the sale of certain market rights to its cardiovascular imaging agent and an exchange offer for $100 million in debt—aimed at shoring up its balance sheet and avoiding bankruptcy.
Epix sold U.S./Puerto Rican, Canadian, and Australian marketing rights to the imaging agent, gadofosveset trisodium, to North Billerica, MA,-based Lantheus Medical Imaging for net proceeds of $28 million. Meanwhile, Epix says that it has begun a major offering to exchange $100 million in debt notes that the company has for cash and common stock. Both deals come on the heels of Epix’s decision last month to cut 33 percent of its staff, or 44 employees, to reduce expenses.
“We believe that this transaction with Lantheus, when coupled with a successful restructuring of our outstanding debt, will position us well to strengthen our balance sheet and overall financial position,” Elkan Gamzu, president and CEO of Epix, said in a statement .
Like many biotechs, Epix has been trying to figure out how to continue operations with dwindling capital resources. The company entered this year with $24.6 million in the cash and investments, a steep drop from the $61 million the firm had in the bank a year earlier. Epix has drugs in mid-stage clinical development for chronic pulmonary disease and Alzheimer’s disease. London-based drug giant GlaxoSmithKline has supported development of the latter drug under a broader collaboration and has an exclusive option to rights for the product.
Epix says that the exchange offer for its $100 million in debt is needed for the company to avoid bankruptcy. Holders of 83 percent of the notes have already committed to the offer, in which Epix will pay holders $180 in cash, 339 shares of common stock, and one contingent value right in exchange for each $1,000 in debt they retire. If all of the note holders take the offer, Epix will cede 44.7 percent of its 41.9 million shares of common stock outstanding.
The company plans to use proceeds from the sale of its imaging agent to cover the costs of the exchange offer. The imaging agent (Vasovist), which is used to help doctors interpret magnetic resonance images of narrowing arteries, garnered a FDA approval late last year. Epix will retain European and other non-U.S. rights to the imaging drug. The company also has to fork over $10.5 million of the $28 million in proceeds to Bayer Schering Pharma, which had owned rights to the drug, to cover its obligations related to the development of the product.