Houston-based Pernix Therapeutics Holdings, a specialty pharmaceutical company, recently announced that it has hired industry veteran Doug Drysdale as Chief Executive Officer. Mr. Drysdale has also been appointed to the Company’s Board of Directors and will serve as Chairman. According to a press release from the company, his appointment is supported by a group of institutional investors led by Athyrium Capital Management, who have agreed to purchase $65 million aggregate principal amount of 8.00% Convertible Senior Notes due 2019 (the “Notes”) from Pernix, providing the company with expansion capital for the acquisition of accretive specialty products to be added to the Company’s portfolio, as well as for working capital and general corporate purposes.
From 2008 to 2013, Mr. Drysdale served as Chief Executive Officer of Alvogen, a company he built from inception to become a global leader in pharmaceuticals. Alvogen now operates in thirty countries and has a portfolio of over 200 projects in development and registration. Prior to Alvogen, Mr. Drysdale helped build the multinational pharmaceutical giant Actavis, as head of mergers and acquisitions and a member of the executive board, spearheading specialty acquisitions such as Sindan (oncology) and Abrika (CR formulations). Recognized in 2012 as an Ernst & Young Entrepreneur of the Year, Doug Drysdale brings a track record of accomplishment earned over the course of a twenty-five year career in the healthcare industry. Alpharma; Forest Laboratories; Alkensa; and Elan Corp are some of the companies where he also held industry leadership positions.
“Doug is a proven value creator for shareholders,” said Mike Pearce, board member and former chief executive officer of Pernix, in the press release. He believes that “fortified with expansion capital and a stable platform free of legacy issues,” Mr. Drysdale will “lead Pernix to unprecedented heights.”
Commenting on his appointment, Mr. Drysdale said that he is excited to be leading Pernix toward a brighter future. “Armed with a strong war chest and with the support of the Pernix board, the Company is well-positioned to acquire specialty pharmaceutical products to add to its portfolio. By focusing less on primary care and more on specialty audiences, Pernix can better leverage its sales and marketing expertise, create cross-selling opportunities, and provide a more cohesive continuum of care to patients and physicians.” Mr. Drysdale also thanked Mike Pearce for “doing a great job of steadying the ship during a period of restructuring for Pernix. I look forward to working with Mike and the other members of our board of directors.”
Mike Pearce, who has resigned as chief executive officer, has agreed to remain with the company through a transition period. Further changes to the Company’s board of directors will be announced in due course as the Company looks to add additionalfurther industry talent to its board.
As for the notes, which mature in 2019 unless earlier converted, the Houston-based company announced that they carry a coupon of 8% and are convertible into shares of Pernix common stock at an initial conversion price of $3.60 per share, representing a conversion premium of more than 70% over the last reported sale price of Pernix’s common stock on the NASDAQ Global Market on February 4, 2014. The purchase of the Notes is expected to close as soon as practicable, subject to the satisfaction of customary closing conditions. The Notes will be issued at a price equal to 100% of the principal amount thereof.
Settlement of Legal Liabilities
Pernix also announced favorable resolution of pending legal matters.
On January 29, 2014, a Stipulation of Dismissal was filed with the United States District Court for the Southern District of Texas, in connection with the settlement of all claims brought against Pernix by the former shareholders of Cypress Pharmaceuticals, Inc. (“Cypress”) and all claims brought against the former shareholders of Cypress by Pernix, in connection with the purchase of Cypress by Pernix pursuant to the Securities Purchase Agreement by and among Pernix and the former Cypress shareholders (the “Purchase Agreement”).
As part of the settlement, Pernix has agreed to pay $1,330,000 to the former Cypress shareholders on or before February 7, 2014, which Pernix accrued at the time of the Cypress acquisition as a contingent consideration in the Company’s financial statements. In exchange for this payment, both parties released all claims against the other parties, which includes the former Cypress shareholders waiving any rights to the put obligation of Pernix included in the Purchase Agreement.
Additionally, the payment repays in full all currently existing obligations by Pernix to fund the escrow account or to pay the holdback amount under the Purchase Agreement. The settlement also modified the language relating to a prospective product milestone payment to the former Cypress shareholders pursuant to the Purchase Agreement with an aim toward greater product development flexibility, but still reflects a one-time payment of $5,000,000, payable in cash or stock, upon the achievement of an NDA acceptance by the FDA of any one of the four pipeline products transferred in the acquisition of Cypress.