KemPharm greenshoe lifts 5.5% convertibles total to $86.25 million

By Wendy Van Sickle

Columbus, Ohio, Feb. 9 – KemPharm, Inc. said the initial purchasers of its previously announced offering of 5.5% senior convertible notes due 2021 fully exercised their over-allotment option to purchase an additional $11.25 million of the notes.

The closing of the additional notes, which was announced Tuesday, brings the total deal size to $86.25 million.

The notes were sold via a Rule 144A offering.

Cowen & Co. acted as the lead bookrunner. RBC Capital Markets LLC was also a bookrunner.

As previously reported, interest is payable semiannually on Feb. 1 and Aug. 1. The notes are convertible into common stock at the holder’s option at an initial conversion rate of 58.4454 shares per each $1,000 of notes.

The conversion rate may increase in the event of certain corporate events. Additionally, holders who convert their notes on or after the first anniversary of issuance may, under certain circumstances, receive an interest make-whole payment payable in additional common shares.

Upon a “fundamental change,” holders can require the company to redeem the notes in cash at par plus accrued interest.

A portion of the proceeds – $18.7 million – will be used to pay in full a credit facility with Deerfield Private Design Fund III LP. The payment includes the $15 million principal amount plus accrued interest and a make-whole amount.

The remaining proceeds will be used along with cash and equivalents to fund research and development of the clinical and preclinical prodrug product candidates in its pipeline, to seek regulatory approval of KP201/APAP and its other product candidates, to support plans for commercialization of KP201/APAP, if approved, and for working capital and general corporate purposes.

KemPharm is based in CoralVille, Iowa.

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