Coherus BioSciences, Inc. (Nasdaq: CHRS) announced that it has entered into agreements for $100 million of senior convertible notes with an initial conversion price representing a 60% premium to the average last reported sale price per share of Coherus common stock over the preceding 15 trading days. New investor HealthCare Royalty Partners ("HCRP") led the transaction with a $75 million investment, and was joined by existing investor KKR, who contributed $20 million, as well as founding investors, MX II Associates LLC. and KMG Capital Partners, LLC.
"We are honored to have the support of such an extraordinary group of sophisticated health care investors," said Denny Lanfear, President and CEO of Coherus. "HealthCare Royalty Partners and KKR are premier private equity players. This capital, priced at a high conversion premium from these top institutions, validates our long-term value proposition as the pure-play market leader in biosimilars, and enhances our cash position to complete the development of our lead biosimilar assets."
"Coherus is a leader in the burgeoning biosimilar marketplace and HealthCare Royalty Partners is pleased to finance their continued growth," said Todd Davis, co-founder and Chairman of the Portfolio Management Committee, HCRP. "Coherus' world class management team has done an incredible job at developing three late stage biosimilar products and additional pipeline assets that hold the promise of meaningful savings and benefit to end-users. We look forward to their continued success, and are excited at the future prospects for the company."
"With three major product candidates – CHS-1701, CHS-1420, and CHS-0214 – approaching registrational regulatory filings in multi-billion dollar global markets, 2016 represents a transformational year for Coherus," said Ali Satvat, Member of KKR and a Director of Coherus. "The management team has done an exemplary job advancing the product portfolio, and we are pleased to support the continued growth of Coherus strategically and financially."
The convertible notes mature on March 31, 2022 and pay interest quarterly at a rate of 8.2% per year. Coherus may redeem the notes after March 31, 2020 if the last reported sale price per share of Coherus common stock exceeds 160% of the conversion price on 20 or more trading days during the 30 consecutive trading days preceding the date the notes are called for redemption. The notes are convertible into shares of Coherus common stock at an initial conversion rate of 44.7387 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $22.35 per share. Any payment of the principal amount of the notes in cash will be subject to a 9% payment premium.
J. Wood Capital Advisors LLC served as financial advisor to Coherus in connection with the financing.
The offer and sale of the notes and the shares issuable upon conversion of the notes have not been registered under the Securities Act of 1933, as amended, or state securities laws, and the notes and shares may not be offered or sold in the United States absent registration under the Securities Act or pursuant to an applicable exemption from those registration requirements. The notes were offered only to accredited investors. Coherus has agreed to file a registration statement with the SEC covering the resale of the shares issuable upon conversion of the notes.