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Athyrium Capital Management Closes $100MM Credit Facility for Recro Pharma

November 21, 2017, 07:09 AM
Filed Under: Pharmaceuticals

Recro Pharma, Inc., a revenue generating specialty pharmaceutical company focused on therapeutics for hospital and other acute care settings, announced that it has secured a $100 million credit facility from funds managed by Athyrium Capital Management, LP, a healthcare-focused investment firm. Proceeds from the facility will be used to refinance Recro’s outstanding debt, pay a $45 million milestone due to intravenous (IV) meloxicam licensor Alkermes plc upon the approval of IV meloxicam 30mg by the U.S. Food and Drug Administration (FDA), and help fund working capital. Piper Jaffray acted as exclusive financial advisor and sole placement agent to Recro on this transaction.

This financing is in the form of a five-year, interest only term loan bearing interest at a rate of LIBOR plus 9.75% per annum. This structure allows for more flexibility at a significantly lower cost of capital relative to the Company’s prior debt.  The funds are structured in three tranches, with $60 million available immediately upon closing of the transaction.  An additional $20 million is available upon the FDA’s approval of IV meloxicam 30mg subject to certain financial conditions. The final $20 million is available after Recro demonstrates early IV meloxicam 30mg commercial traction.

In connection with the credit facility, Recro issued and granted to Athyrium warrants to purchase 348,664 shares of Recro common stock at an exercise price of $8.60 per share.

“We are delighted to have the support and confidence of Athyrium, a premier partner known for its strategic investments in promising healthcare companies and assets,” said Gerri Henwood, President and Chief Executive Officer of Recro Pharma.  “This financing demonstrates the continued strong performance of our CDMO business, as well as belief in the future commercial prospects for IV meloxicam 30mg. The refinancing of the debt and the availability of the further credit facility represent a key step in Recro’s evolution, allowing us to be well positioned to pay the IV meloxicam 30mg approval milestone and refinance our existing debt with non-dilutive capital. In addition, it provides the financial flexibility to aid in transforming our business into a commercial-stage enterprise. We believe IV meloxicam 30mg’s profile may allow it to be an important product for the management of moderate to severe pain, due to its ability to provide an important, long duration of action alternative to injectable opioids, upon potential approval by the FDA in May 2018.”

Richard Pines, Partner at Athyrium, stated: “The combination of Recro’s stable, cash flow generating CDMO business and upside potential from its non-opioid, acute care pain franchise creates an attractive investment profile for Athyrium. With a strong safety and efficacy profile, based on our due diligence, we believe IV meloxicam can be a valuable component of multi-modal pain management in the post-surgical setting. We are particularly excited about our exposure to strong tailwinds in the pain management market, as all key stakeholders, including the government, regulatory agencies, payers, providers and patients are actively seeking alternatives to opioids to minimize the negative impact on patients and the healthcare system. We look forward to partnering with Recro during this transformative time in the Company’s life.”


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