Benzinga | Nov 3, 2020 07:01AM EST

Aquestive Therapeutics Signs Royalty Monetization Agreement with Marathon Asset Management for up to $125M

* Receives $40 million of proceeds at closing, with potential $25 million of additional proceeds by mid-2022

* Reduces outstanding debt to $51.5 million

WARREN, N.J., Nov. 03, 2020 (GLOBE NEWSWIRE) -- Aquestive Therapeutics, Inc. (NASDAQ:AQST), a pharmaceutical company focused on developing and commercializing differentiated products that address patients' unmet needs and solve therapeutic problems, announced today that it has entered a royalty monetization agreement with an affiliate of Marathon Asset Management, a leading global investment firm ("Marathon"), that will result in proceeds to the Company of up to $125 million. In exchange for this funding, Marathon will be entitled to receive all royalties and other payments due under Aquestive's license agreement with Sunovion Pharmaceuticals Inc. ("Sunovion") as a result of Sunovion's commercialization of KYNMOBI(tm) (apomorphine HCI) sublingual film for the acute, intermittent treatment of OFF episodes in patients with Parkinson's disease. Net proceeds of the transaction will be used to repay certain senior notes and fund the Company's ongoing development and commercialization of its proprietary product pipeline candidates, as well as for working capital purposes. KYNMOBI received approval from the U.S. Food and Drug Administration (FDA) on May 21, 2020.

Under the terms of the agreement, Aquestive will receive $40 million at closing and is eligible to receive up to $85 million of contingent payments at various points, beginning as early as the fourth quarter of 2020, based on the achievement of certain worldwide royalty targets and certain other commercial milestones. The transaction is anticipated to close later this month.

With the upfront net proceeds of the monetization, the Company will repay $22.5 million of senior notes, and issue $4.0 million of new senior notes in lieu of paying a prepayment premium on the early repayment of the senior notes, bringing outstanding senior notes to $51.5 million in the aggregate. In addition, the holders of the senior notes have extended to December 31, 2021 the Company's ability to access, at the Company's option, $30 million of senior notes re-openers under the Company's senior debt indenture. The first $10 million senior notes re-opener represents a commitment of such amount by current holders of senior notes, contingent upon FDA approval of the Company's product candidate Libervant(tm) (diazepam) Buccal Film for the management of seizure clusters. A second $20 million senior notes re-opener represents a right, at the Company's option, to market to current senior note holders or other lenders additional senior notes up to such amount, contingent upon FDA approval of Libervant for U.S. market access. If and to the extent that these re-openers are accessed by the Company, the Company will grant warrants to purchase up to 714,000 shares of the Company's common stock, with an exercise price calculated based on the 30-day volume weighted average closing price of the Company's common stock at the time the senior notes are issued. In addition, upon the closing of the transaction, the Company will issue warrants to purchase 143,000 shares of the Company's common stock prior to closing.

"This financing from Marathon provides Aquestive with immediate and substantial capital to reduce our debt and advance key initiatives of the Company, including supporting the FDA approval of Libervant, and the ongoing clinical development of AQST-108, an oral sublingual formulation delivering systemic epinephrine," stated Keith Kendall, President and Chief Executive Officer of Aquestive. "The capital from this transaction extends our cash runway through the third quarter of 2021 and possibly beyond. Additionally, the extension of the opportunity to access the $30 million of additional notes under our senior credit facility represents significant additional capital potentially available to the Company as early as mid-2021. The transaction demonstrates the strong value of our PharmFilm(r) technology in bringing therapeutic solutions to address patients' unmet needs. We are delighted to have partnered with Marathon Asset Management and our senior lenders for this important milestone for Aquestive," concluded Mr. Kendall.

"This investment allows Aquestive to efficiently finance the advancement of an array of innovative and differentiated therapies that have the potential to meaningfully benefit patients," said Bruce Richards, Chairman & Chief Executive Officer of Marathon. "We are pleased to be able to support those efforts while delivering attractive, uncorrelated returns to our investors as we continue to build on our success in the healthcare financing space and, in particular, the royalty monetization sector."

"We are glad that our structured financing has enabled Aquestive to pursue its developmental goals and look forward to a successful working relationship. The impact that KYNMOBI will have for people living with Parkinson's disease is a positive development," stated Dr. Evan Bedil, Managing Director and head of Healthcare Credit and Royalty Monetization at Marathon.

Morgan Stanley & Co. LLC acted as sole structuring agent and Dechert LLP acted as special transaction counsel to Aquestive on the transaction.