On June 8, 2023 Ionis Pharmaceuticals, Inc. (NASDAQ: IONS) reported the pricing of $500.0 million aggregate principal amount of 1.75% Convertible Senior Notes due 2028 (the "notes") in a private placement (the "offering") to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") (Press release, Ionis Pharmaceuticals, JUN 8, 2023, View Source [SID1234632661]). Ionis also granted the initial purchasers of the notes an option to purchase, within the 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $75.0 million aggregate principal amount of notes from Ionis. The sale of the notes is expected to close on June 12, 2023, subject to customary closing conditions.
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The notes will be general unsecured obligations of Ionis, and will accrue interest payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023, at a rate of 1.75% per year. The notes will mature on June 15, 2028, unless earlier converted or repurchased.
Ionis estimates that the net proceeds from the offering will be approximately $487.6 million (or approximately $560.8 million if the initial purchasers exercise their option to purchase additional notes in full), after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by Ionis. Ionis expects to use approximately $420.4 million of the net proceeds from the offering to repurchase $434.1 million in aggregate principal amount of its 0.125% Convertible Senior Notes due 2024 (the "2024 notes") in privately negotiated transactions. Ionis expects to use the remaining net proceeds from the offering for additional repurchases of the 2024 notes from time to time following the offering, including the repayment of any remaining 2024 notes at maturity, and for general corporate purposes.
Before March 15, 2028, holders will have the right to convert their notes only upon the satisfaction of specified conditions and during certain periods. On or after March 15, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their notes at any time. Upon conversion, Ionis will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election. The conversion rate for the notes will initially be 18.6120 shares of Ionis’ common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $53.73 per share of Ionis’ common stock). The initial conversion price represents a premium of approximately 32.5% over the last reported sale price of $40.55 per share of Ionis’ common stock on June 7, 2023. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued or unpaid interest.
Ionis may not redeem the notes prior to June 20, 2026. Ionis may redeem for cash all or any portion of the notes (subject to certain limitations), at its option, on or after June 20, 2026 if the last reported sale price of Ionis’ common stock has been at least 130% of the conversion price for the notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which Ionis provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. However, Ionis may not redeem less than all of the outstanding notes unless at least $100.0 million aggregate principal amount of notes are outstanding and not called for redemption as of the time Ionis sends the related notice of redemption. No sinking fund is provided for the notes.
If Ionis undergoes a "fundamental change" (as defined in the indenture that will govern the notes), then, subject to certain conditions and limited exceptions, holders may require Ionis to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date or if Ionis delivers a notice of redemption, Ionis will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event or convert its notes called (or deemed called) for redemption in connection with such notice of redemption, as the case may be.
In connection with any repurchase of the 2024 notes, Ionis expects that holders of the 2024 notes who agree to have their 2024 notes repurchased and who have hedged their equity price risk with respect to such notes (the "hedged holders") will unwind all or part of their hedge positions by buying Ionis’ common stock and/or entering into or unwinding various derivative transactions with respect to Ionis’ common stock. The amount of Ionis’ common stock to be purchased by the hedged holders or in connection with such derivative transactions may be substantial in relation to the historic average daily trading volume of Ionis’ common stock. This activity by the hedged holders may result in an increase in the effective conversion price of the notes.
The notes and any shares of Ionis’ common stock issuable upon conversion of the notes have not been and will not be registered under the Securities Act, any state securities laws or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.
This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification thereof under the securities laws of any such state or jurisdiction.