UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 13, 2021 (
(Exact name of registrant as specified in its charter)
|
| |||
(State or other jurisdiction | (Commission File Number) | (IRS Employer | ||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Item 1.01 Entry into a Material Definitive Agreement
On August 12, 2021, Protalix BioTherapeutics, Inc. (the “Company”) entered into definitive agreements (the “Exchange Agreements”) relating to exchanges (the “Exchanges”) of an aggregate of $54.65 million principal amount of the Company’s outstanding 7.50% Senior Secured Convertible Notes due 2021 (the “Existing Notes”) for an aggregate of $28.75 million principal amount of newly issued 7.50% Senior Secured Convertible Notes due 2024 (the “Exchange Notes”), $25.90 million in cash and accrued and unpaid interest through the cloing date. The Exchange Agreements contain customary representations, warranties and covenants by us together with customary closing conditions. The Exchanges, which will be made in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereof, is expected to close as soon as practicable, subject to satisfaction of certain closing conditions. Following the closing of the Exchanges, the Company expects that $3.27 million aggregate principal amount of the Existing Notes will remain outstanding. The description of the Exchange Agreements contained in this Current Report on Form 8-K is qualified in its entirety by reference to the complete text of the form of the Exchange Agreement, a copy of which is filed as Exhibit 10.1 and incorporated herein by reference.
The Exchange Notes will be issued pursuant to an Indenture to be entered into between the Company, the guarantors party thereto, The Bank of New York Mellon Trust Company, N.A., as trustee and Wilmington Savings Fund Society, FSB, as collateral agent (the “Indenture”). Like the Existing Notes and at equal priority, the Exchange Notes will be secured by perfected liens on all of the material assets of the Company and its subsidiaries. Interest on the Exchange Notes will be payable semi-annually at a rate of 7.50% per annum. The Exchange Notes mature three years after issuance, unless earlier purchased, converted, exchanged or redeemed, and will be guaranteed by the Company’s subsidiaries.
Holders may require the Company to repurchase their Exchange Notes upon the occurrence of certain events that constitute a fundamental change under the Indenture at a purchase price equal to the principal amount thereof plus accrued and unpaid interest to, but excluding, the fundamental change purchase date.
Holders may convert their Exchange Notes at any time prior to the close of business on the business day immediately preceding the stated maturity date of the Exchange Notes. Upon conversion, the Company may, at its election, deliver shares of the Company’s common stock (“Common Stock”), cash or a combination of shares of Common Stock and cash based on the applicable conversion rate. However, until the Company obtains stockholder approval to issue additional shares of Common Stock upon conversion of the Exchange Notes, the Company will be required to settle at least a portion of its conversion obligation in cash. The Company intends to seek stockholder approval promptly in order to settle conversions of the Exchange Notes in Common Stock.
The initial conversion rate is based on a 32.5% premium to the closing price of the Company’s Common Stock on the NYSE American at the close of trading on August 13, 2021.
The Indenture includes covenants customary for instruments of this type, including, without limitation, restrictions on the Company’s ability to incur additional indebtedness, create liens on its properties, pay dividends and make restricted payments or certain investments, and also requires the Company to apply a portion of the proceeds from certain asset sales or licensing arrangements to redeem the Notes, in each case subject to certain exceptions.
The offer and sale of the Exchange Notes and the shares of Common Stock issuable upon conversion of the Exchange Notes, if any, will not be registered under the Securities Act or any state securities laws, and unless so registered, the Exchange Notes and such shares may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state laws.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information set forth under Item 1.01 of this Current Report is incorporated herein by reference.
Item 3.02 Unregistered Sale of Equity Securities
The information set forth under Item 1.01 of this Current Report is incorporated herein by reference.
Item 8.01 Other Events
On August 13, 2021, the Company issued a press release announcing the entry into the Exchange Agreements, the Exchanges and certain terms and conditions thereof. A copy of the press release is filed herewith as Exhibit 99.1 and is incorporated by reference into this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits
Exhibit No. |
| Description |
|
|
|
10.1 | ||
99.1 | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 13, 2021 | PROTALIX BIOTHERAPEUTICS, INC. | ||
|
|
|
|
| By: | /s/ Dror Bashan | |
|
| Name: | Dror Bashan |
|
| Title: | President and Chief Executive Officer |
Exhibit 10.1
Execution Version
EXCHANGE AGREEMENT dated as of August 12, 2021 (this “Agreement”), by and among Protalix BioTherapeutics, Inc., a Delaware corporation (the “Company”), and the parties signatory hereto (each, a “Purchaser,” and collectively, the “Purchasers”).
As of the date hereof, each Purchaser owns and holds an aggregate principal amount of the Company’s 7.50% Senior Secured Convertible Notes due 2021 (the “Existing Notes”) shown opposite such Purchaser’s name under “Principal Amount of Existing Notes” on Schedule I hereto. The Existing Notes have the covenants and terms set forth in the indenture dated as of December 7, 2016, as supplemented by the First Supplemental Indenture, dated July 24, 2017, and the Second Supplemental Indenture, dated November 27, 2017 (the “Existing Indenture”), between the Company, the guarantors party thereto, The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) and Wilmington Savings Fund Society, FSB, as collateral agent (the “Collateral Agent”). All capitalized terms used herein that are not otherwise defined shall have the meanings ascribed to them in the Existing Indenture.
Each Purchaser desires to exchange with the Company (the “Exchange”) its Existing Notes for (a) the aggregate principal amount of newly issued 7.50% Senior Secured Convertible Notes due 2024 (the “Exchange Notes”) shown opposite such Purchaser’s name under “Principal Amount of Exchange Notes” on Schedule I hereto; (b) cash in the amount shown opposite such Purchaser’s name under “Cash Consideration” on Schedule I hereto (the “Cash Consideration”) and (c) cash in the amount of the accrued and unpaid interest on such Existing Notes through, but excluding, the Closing Date (as defined below) (the “Accrued Interest”), in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the provisions of Section 3(a)(9) thereof.
Each of the Purchasers has irrevocably and unconditionally agreed to consent to the adoption of a third supplemental indenture, in form and substance reasonably acceptable to the Purchasers (the “Third Supplemental Indenture”) to amend the terms of the Existing Indenture to permit the issuance of the Exchange Notes, the incurrence of liens securing the Exchange Notes, the entry by the Company, the guarantors party thereto, the Trustee and the Collateral Agent into the indenture to be dated as of the Closing Date (as defined below) for the Exchange Notes (the “Exchange Notes Indenture”) and that the liens securing the Exchange Notes shall be pari passu with the Existing Notes and Existing Indenture (effective as of the execution of this Agreement).
In consideration of the mutual covenants and agreements contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Company and the Purchasers, severally but not jointly, hereby agree as follows:
2
Accrued Interest on the Existing Notes of such Purchaser, (the consideration referenced in the foregoing clauses (a) and (b), the “Exchange Consideration”), in exchange for the Existing Notes of such Purchaser having the aggregate principal amount set forth on Schedule I hereto opposite such Purchaser’s name, and each Purchaser, severally and not jointly, agrees to exchange all such Existing Notes for such Exchange Consideration.
The Company represents and warrants to, and agrees with, each Purchaser, as of the Closing Date, as follows:
3
corporate power and authority to own its properties and conduct its business as currently conducted. The Company’s subsidiaries, Protalix Ltd. and Protalix B.V. (the “Subsidiaries” and, together with the Company, the “Company Parties”), are duly organized and validly existing and in good standing under the laws of Israel and the Netherlands, respectively, and have the organizational power and authority to hold their respective properties and conduct their businesses as currently conducted. The Company does not have any “significant subsidiary” as defined in Rule 1-02 of Regulation S-X that is not listed above.
4
paid and nonassessable; the maximum number of shares of Common Stock initially issuable upon conversion of the Exchange Notes (including the maximum number of additional shares that may be issued in connection with a “Make-Whole Adjustment Event” assuming all conversions are settled solely in shares of Common Stock and the “Make-Whole Premium” assuming settlement solely in shares of Common Stock (the “Maximum Number of Shares”)) has been duly authorized and, when issued upon conversion of the Exchange Notes in accordance with the Exchange Notes Indenture, will be validly issued, fully paid and nonassessable; the Exchange Notes Indenture has been duly authorized and, assuming due authorization, execution and delivery thereof by the Trustee and the Collateral Agent, when executed and delivered by the Company, will constitute a legal, valid, binding instrument enforceable against the Company in accordance with its terms (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights generally from time to time in effect and to general principles of equity); the Board of Directors of the Company has duly and validly adopted resolutions reserving a number of shares of Common Stock for issuance upon conversion of the Exchange Notes equal to the Maximum Number of Shares; and such shares of Common Stock are not subject to any preemptive or similar right.
5
6
7
Property; and (g) there is no prior art of which the Company is aware that may render any U.S. patent held by the Company invalid or any U.S. patent application held by the Company unpatentable which has not been disclosed to the U.S. Patent and Trademark Office.
Each Purchaser, severally but not jointly, represents and warrants to, and agrees with, the Company, as of the Closing Date, as follows:
8
clauses (b) and (c) that would not reasonably be expected to materially adversely impact the ability of such Purchaser to consummate the transactions contemplated hereby.
9
10
11
12
“Business Day” means any day other than a Saturday, a Sunday or any other day on which the Federal Reserve Bank of New York, Wilmington, Delaware or the place of payment is authorized or required by law or executive order to close or be closed.
“Person” or “person” shall mean an individual, corporation, association, partnership, trust, joint venture, business trust or unincorporated organization, or a government or any agency or political subdivision thereof.
Protalix BioTherapeutics, Inc.
2 University Plaza
Suite 100
Hackensack, NJ, 07601
Attention: Joseph Magnas, General Counsel.
Facsimile: 972-4-902-8102
E-mail: Joseph.Magnas@protalix.com
with a copy to (which shall not constitute notice):
Mayer Brown LLP
1221 Avenue of the Americas
New York, New York 10020
Attention: Anna T. Pinedo
Facsimile: 1-212-506-2275
E-mail: apinedo@mayerbrown.com
13
14
15
8BEN-E or other appropriate Form W-8 (or successor form), together with any other information necessary in order to establish an exemption from, or a reduced rate of, U.S. federal income tax withholding, and except to the extent that an exemption or reduction is properly established, all payments to be made by the Company in respect of the Exchange Notes shall be made net of deduction or withholding for or on account of taxes as required by applicable law. Each Purchaser shall promptly notify the Company if at any time such previously delivered IRS forms or information are no longer correct or valid.
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
PROTALIX BIOTHERAPEUTICS, INC,
[Signature Page to Exchange Agreement]
Print or Type: | , as a Purchaser |
| |
| By: |
| |
| Name of Purchaser |
| (Individual or Institution) |
| |
| |
| Jurisdiction of Purchaser’s Executive Offices |
| |
| |
| Name of Individual representing Purchaser |
| |
| |
| Title of Individual representing Purchaser |
| |
Signature by: | Individual representing Purchaser: |
| |
| |
| |
Notice Information: | Address: |
| Telephone: |
| Facsimile: |
| Email: |
NOMINEE/CUSTODIAN (Name in which the Exchange Notes and, if applicable, Common Stock issued upon conversion of the Exchange Notes are to be registered if different than name of Purchaser):
| |
DTC Number: | |
Tax I.D. Number: | |
(If acquired in the name of a nominee/custodian, the taxpayer I.D. number of such nominee/custodian)
* * * Please note that if you are sub-allocating to multiple funds,
you must execute a signature page for each fund. ***
[Signature Page to Exchange Agreement]
SCHEDULE I
Amounts of Existing Notes, Principal Amount of Exchange Notes, Amounts of Cash for
Accrued Interest, Cash Consideration
Name | Principal Amount of Existing Notes | Principal Amount of Exchange Notes | Cash Consideration |
| | | |
| | | |
Total: | | | |
Exhibit 99.1
Protalix BioTherapeutics Announces Private Note Exchange
CARMIEL, Israel, August 13, 2021 /PRNewswire/Protalix BioTherapeutics, Inc. (NYSE American:PLX) (TASE:PLX), a biopharmaceutical company focused on the development, production and commercialization of recombinant therapeutic proteins produced by its proprietary ProCellEx® plant cell-based protein expression system, today announced the entry into definitive agreements (the “Exchange Agreements”) relating to exchanges (the “Exchanges”) of an aggregate of $54.65 million principal amount of the Company’s outstanding 7.50% Senior Secured Convertible Notes due 2021 (the “Existing Notes”) for an aggregate of $28.75 million principal amount of newly issued 7.50% Senior Secured Convertible Notes due 2024 (the “Exchange Notes”), $25.90 million in cash and accrued and unpaid interest through the closing date. The Exchanges are expected to close as soon as practicable, subject to satisfaction of certain closing conditions. Following the closing of the Exchanges, the Company expects that $3.27 million aggregate principal amount of the Existing Notes will remain outstanding.
“The exchange of the notes underscores Protalix’s commitment to addressing our capital structure while continuing development of our pegunigalsidase alfa program and our early pipeline,” said Dror Bashan, Protalix’s President and Chief Executive Officer. “We believe that the participation of so many of our institutional note holders, including funds managed by Highbridge Capital Management, LLC, UBS O’Connor LLC, Citigroup Global Markets, Whitebox Advisors, and Tulip Capital, is a telling vote of confidence in Protalix.”
Like the Existing Notes and at equal priority, the Exchange Notes will be secured by perfected liens on all of the material assets of the Company and its subsidiaries. Interest on the Exchange Notes will be payable semi-annually at a rate of 7.50% per annum. The Exchange Notes will mature three years after issuance, unless earlier purchased, converted, exchanged or redeemed, and will be guaranteed by the Company’s subsidiaries.
Holders may require the Company to repurchase their Exchange Notes upon the occurrence of certain events that constitute a fundamental change under the indenture that will govern the Exchange Notes (the “Indenture”) at a purchase price equal to the principal amount thereof plus accrued and unpaid interest to, but excluding, the fundamental change purchase date.
Holders may convert their Exchange Notes at any time prior to the close of business on the business day immediately preceding the stated maturity date of the Exchange Notes. Upon conversion, the Company may, at its election, deliver shares of the Company’s common stock (“Common Stock”), cash or a combination of shares of Common Stock and cash based on the applicable conversion rate. However, until the Company obtains stockholder approval to issue additional shares of Common Stock upon conversion of the Exchange Notes, the Company will be required to settle at least a portion of its conversion obligation in cash. The Company intends to seek stockholder approval promptly in order to be able to settle conversions of the Exchange Notes in Common Stock.
The initial conversion rate will be based on a 32.5% premium to the closing price of the Common Stock on the NYSE American at the close of trading on August 13, 2021.
The Indenture includes covenants customary for instruments of this type, including, without limitation, restrictions on the Company’s ability to incur additional indebtedness, create liens on its properties, pay dividends and make restricted payments or certain investments, and also requires the Company to apply a portion of the proceeds from certain asset sales or licensing arrangements to repay the Exchange Notes, in each case subject to certain exceptions.
“This exchange transaction allows us to continue to advance our lead drug candidate, PRX-102, towards approval and to progress our early stage pipeline candidates,” said Eyal Rubin, Protalix’s Sr. Vice President and Chief Financial Officer.
This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. The offer and sale of the Exchange Notes and the shares of Common Stock issuable upon conversion of the Exchange Notes, if any, will not be registered under the Securities Act of 1933 or any state securities laws, and unless so registered, the Exchange Notes and such shares may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act of 1933 and applicable state laws.
About Protalix BioTherapeutics, Inc.
Protalix is a biopharmaceutical company focused on the development and commercialization of recombinant therapeutic proteins expressed through its proprietary plant cell-based protein expression system, ProCellEx. Protalix was the first company to gain U.S. Food and Drug Administration (FDA) approval of a protein produced through a plant cell-based in suspension expression system. Protalix’s unique expression system represents a new method for developing recombinant proteins in an industrial-scale manner.
Protalix’s first product manufactured by ProCellEx, taliglucerase alfa, was approved by the FDA in May 2012 and, subsequently, by the regulatory authorities of other countries. Protalix has licensed to Pfizer Inc. the worldwide development and commercialization rights for taliglucerase alfa, excluding Brazil, where Protalix retains full rights.
Protalix’s development pipeline consists of proprietary versions of recombinant therapeutic proteins that target established pharmaceutical markets, including the following product candidates: pegunigalsidase alfa, a modified stabilized version of the recombinant human α–Galactosidase-A protein for the treatment of Fabry disease; alidornase alfa, or PRX-110, for the treatment of various human respiratory diseases or conditions; PRX-115, a plant cell-expressed recombinant PEGylated uricase for the treatment of refractory gout; PRX-119, a plant cell-expressed long action DNase I for the treatment of NETs-related diseases; and others. Protalix has partnered with Chiesi Farmaceutici S.p.A., both in the United States and outside the United States, for the development and commercialization of pegunigalsidase alfa, and with SarcoMed USA, Inc. for the worldwide development and commercialization of PRX-110 for use in the
treatment of any human respiratory disease or condition including, but not limited to, sarcoidosis, pulmonary fibrosis, and other related diseases via inhaled delivery.
Forward-Looking Statements Disclaimer
To the extent that statements in this press release are not strictly historical, all such statements are forward-looking, and are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. The terms “expect,” “anticipate,” “believe,” “estimate,” “project,” “may,” “plan,” “will,” “would,” “should” and “intend,” and other words or phrases of similar import are intended to identify forward-looking statements. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual future experience and results to differ materially from the statements made. These statements are based on our current beliefs and expectations as to such future outcomes. Drug discovery and development involve a high degree of risk and the final results of a clinical trial may be different than the preliminary findings for the clinical trial. Factors that might cause material differences include, among others: risks relating to our ability to complete the Exchanges in a timely manner; the risks that the FDA may not hold a Type A Meeting for the PRX-102 BLA on a timely manner; risks related to the timing and progress of the preparation of an updated BLA addressing the complete response letter; risks related to the timing, progress and likelihood of final approval by the FDA of a resubmitted BLA for PRX-102 and, if approved, whether the use of PRX-102 will be commercially successful; failure or delay in the commencement or completion of our preclinical studies and clinical trials, which may be caused by several factors, including: slower than expected rates of patient recruitment; unforeseen safety issues; determination of dosing issues; lack of effectiveness during clinical trials; inability or unwillingness of medical investigators and institutional review boards to follow our clinical protocols; and inability to monitor patients adequately during or after treatment; delays in the approval or potential rejection of any applications we file with the FDA, European Medicines Agency or other health regulatory authorities, and other risks relating to the review process; risks associated with the novel coronavirus disease, or COVID-19, outbreak, which may adversely impact our business, preclinical studies and clinical trials; risks related to any transactions we may effect in the public or private equity markets to raise capital to finance future research and development activities, general and administrative expenses and working capital; the risk that the results of the clinical trials of our product candidates will not support the applicable claims of safety or efficacy, or that our product candidates will not have the desired effects or will be associated with undesirable side effects or other unexpected characteristics; risks related to our ability to maintain and manage our relationship with our collaborators, distributors or partners; risks related to the amount and sufficiency of our cash and cash equivalents; risks relating to our ability to make scheduled payments of the principal of, to pay interest on or to refinance our outstanding notes or any other indebtedness; our dependence on performance by third party providers of services and supplies, including without limitation, clinical trial services; the inherent risks and uncertainties in developing drug platforms and products of the type we are developing; the impact of development of competing therapies and/or technologies by other companies and institutions; potential product liability risks, and risks of securing adequate levels of product liability and other necessary insurance coverage; and other factors described in our filings with the U.S. Securities and Exchange Commission. The statements in this press release are valid only as of the date hereof and we disclaim any obligation to update this information, except as may be required by law.
Investor Contact
Chuck Padala, Managing Director
LifeSci Advisors
646-627-8390
chuck@lifesciadvisors.com
Source: Protalix BioTherapeutics, Inc.
###