EPIX Pharmaceuticals holders tender nearly 97% of 3% convertibles in exchange offer

By Angela McDaniels

Tacoma, Wash., May 5 - EPIX Pharmaceuticals, Inc. said it received tenders and consents for $96.84 million of its $100 million 3% convertible senior notes due 2024 during an exchange offer that expired May 4.

The company previously warned that it might be forced to file for bankruptcy if it were unable to restructure its obligations under the convertibles.

For each $1,000 principal amount of convertibles, holders will receive $180 in cash, 339 shares of common stock and one contingent value right.

In total, the company will pay $17.4 million in cash and issue 32.8 million shares and 97,000 contingent value rights.

Subject to some exceptions, each contingent value right represents a contractual right to receive additional payments if, within nine months after the exchange offer or earlier under some circumstances, the company repurchases convertibles not tendered in the offer at a greater value than that being offered now.

The company was soliciting consents to amend the indenture governing the convertibles in order to eliminate some restrictive covenants and events of default.

Holders who tendered were deemed to have delivered consents.

When the offer began on April 7, EPIX said that holders of about 83% of the convertibles had committed to tender their holdings and consent to the proposed amendments.

The exchange offer was conditioned on the tender of at least 93% of the outstanding convertibles.

Some holders of notes tendered in the offer, representing about 83% of the total common stock to be issued in offer, have agreed to a contractual lock-up that expires with respect to one-third of their shares on each of the 30-, 60- and 90-day anniversaries of the exchange offer, according to a company news release.

The company planned to fund the exchange offer with the proceeds from the sale of its U.S., Canadian and Australian rights for MS-325, its novel blood pool magnetic resonance angiography agent, to Lantheus Medical Imaging, Inc.

The gross proceeds were expected to be $28 million, and EPIX said it would pay $10.5 million of this to Bayer Schering Pharma AG to satisfy its obligations related to U.S., Canadian and Australian MS-325 development costs.

EPIX and Bayer Schering Pharma had a collaboration and commercialization agreement for MS-325 that ended on Feb. 28. MS-325 was formerly marketed as Vasovist, gadofosveset trisodium, by Bayer Schering Pharma.

The exchange agent was U.S. Bank NA (800 934-6802).

EPIX is a Lexington, Mass.-based biopharmaceutical company.

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