Publicly-traded Ontario-based Aralez Pharmaceuticals US Inc. ($ARLZ), a specialty pharma company focused on the development and commercialization of cardiovascular products, filed for bankruptcy to pursue sales of its main operating businesses in the US and Canada. The company will use the bankruptcy process to sell its TOPROL-XL franchise, a beta-blocker used to treat high blood pressure, chest pain and heart failure, to its secured lender, Deerfield Management Company LP, for approximately $140mm; it will also sell its VIMOVO royalties and Canadian operations to Nuvo Pharmaceuticals Inc. ($NRI) in a transaction valued at $110mm. The company purchased the former franchise in late 2016 for $175mm so a sale for $140mm is a bit of a slap in the face.
The company blames its chapter 11 filing on Amazon. Just kidding. These pharma deals are so technical and boring that we had to write that just to see if you were still paying attention.
The company REALLY blames its chapter 11 filing on a “highly competitive”pharmaceuticals market “characterized by rapidly changing markets and technology, emerging industry standards and frequent introduction of new products.” It notes:
The market is dominated by a small number of highly-concentrated global competitors, many of which boast substantially greater resources than the Company, and competition is based on, among other things, product safety, reliability, availability, and price.
The company seeks approval of a $15mm DIP credit facility provided by Deerfield.
Jurisdiction: Southern District of New York (Judge Glenn)
Capital Structure: $203.1mm 12.5% term loan (plus $2.7mm in PIK interest); $75.5mm 2.5% ‘22 senior convertible secured notes (plus $200k in PIK interest).
Legal: Willkie Farr & Gallagher LLP (Paul V. Shalhoub, Robin Spigel, Debra C. McElligott)
Financial Advisor: Alvarez & Marsal Healthcare Industry Group LLC
Investment Banker: Moelis & Company (Barak Klein)
Claims Agent: Prime Clerk LLC
Other Parties in Interest:
DIP Agent: Deerfield Management Company LP (Legal: Katten Muchin Rosenman LLP, Steven Reisman, Shaya Rochester, Peter Siddiqui, Paul Musser)