Novelion Announces Loan Agreement and Business Update

Novelion’s (NASDAQ:NVLN) subsidiary Aegerion Pharmaceuticals announced a loan agreement and business update on Thursday (November 8).

Aegerion will receive a loan financing facility of US$50 million in new secured term loans in cash and US$22.5 million of loans on behalf of Aegerion which will receive two percent of convertible notes due in August 2019.

The financing will be managed by Athyrium and Highbridge Capital Management. This news comes after the company had solicited third party to lenders for financing.

Jack Hackman, interim CEO of Novelion, said the company’s operational improvement and cost reduction strategies executed throughout the year played a critical role in Aegerion’s cash flow. The subsidiary should be cash flow positive by Q2 2019, with the financing set to assist the company’s near-term goal of capital restructuring, he said.

Aegerion first received US$21.2 million of the proceeds of this funding to repay its debt from another loan it received in March 2018. Another US$3.5 million of the loan announced Thursday will also be used to repay Novelion from another loan program paid out to Aegerion.

Since receiving this new loan agreement, Aegerion has approximately US$411.8 million debt.

Aegerion expects the remaining funds of this loan, minus fees and expenses, to be just over US$20 million. Novelion will have access to the funds for general corporate purposes.

Thes loan’s maturity date is February 15, 2019, but may be extended at Aegerion’s discretion.

Novelion and its subsidiary have engaged with investment banking advisories to explore and advice all financial and strategic opportunities to restructure Aegerion’s convertible notes. This could also mean the sale of merger of both companies, their assets, businesses or licensing deals.

The press release added, aside from this current funding, Aegerion can’t guarantee it will be able to refinance the US$36.8 million loan from Novelion, the remaining US$302.5 million, the two percent convertible notes or the new loan agreement of US$72.5 million.

As for the business update, Novelion is expecting net product sales around US$140 million and US$160 million in 2018, and 2019, respectively. A blended cash gross margin of about 80 percent will be adjusted for non-cash items.

At the end of the third quarter, Novelion had about US$27.4 million in cash. As of this new loan agreement, Novelion expects to have US$15.7 million and Aegerion US$37.5 million.

Another business update for Aegerion includes pursuing marketing approvals of its product MYALEPT for a rare genetic disorder in many South American countries.

As for its other drug JUXTAPID, the company is expecting to hear back from its Brazilian marketing authorization in the first half of 2019. Aegerion is already preparing for the commercial launch of the same drug in Argentina, where it already received approval.

Aegerion is also developing the drug candidate lomitapide for another rare genetic disease. The company plans to pursue an additional indication for the drug.

As noted for these approved and in-development drugs, Novelion through its subsidiary Aegerion is focused on developing drugs for metabolic diseases and rare diseases.

Investor takeaway

With this business and loan agreement, Novelion’s share price increased 76.06 percent to close Thursday’s trading session at US$1.25.

With plenty of information for investors to take in, some key milestones to look forward to is the drug approval in Brazil for JUXTAPID, further MYALEPT regulatory applications in South America and the company organizing financing throughout 2019.

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Securities Disclosure: I, Gabrielle Lakusta, hold no direct investment interest in any company mentioned in this article.