On May 7, 2020 Apellis Pharmaceuticals, Inc. (Nasdaq:APLS), a global biopharmaceutical company pioneering targeted C3 therapies, reported that it had entered into subscription agreements with a number of institutional investors for a private placement of $300.0 million aggregate principal amount of 3.500% convertible senior notes due 2026 (the "notes") for an aggregate purchase price of $328.9 million (Press release, Apellis Pharmaceuticals, MAY 7, 2020, View Source [SID1234557318]). The private placement is expected to close on May 12, 2020, subject to satisfaction of customary closing conditions.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

The notes issuance is a reopening of, and will form a single series with, and have the same terms as, Apellis’ $220 million aggregate principal amount of 3.500% convertible senior notes due 2026 (the "existing notes") issued on September 16, 2019, but will have a different issue date, issue price, CUSIP number and different restrictions on transfer. The notes will be issued as additional notes under the indenture dated September 16, 2019 and will rank equal in right of payment to the existing notes.

The notes will be unsecured, senior obligations of Apellis, and will bear interest at a rate of 3.500% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2020. The notes will mature on September 15, 2026, unless earlier repurchased, redeemed or converted in accordance with their terms.

The notes will be convertible into cash, shares of Apellis common stock, or a combination of cash and shares of Apellis common stock, at Apellis’ election. Prior to March 15, 2026, the notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the second scheduled trading day immediately preceding the maturity date.

The conversion rate for the notes will initially be 25.3405 shares of Apellis common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $39.46 per share. The conversion rate will be subject to adjustment upon the occurrence of certain events.

Apellis estimates that the net proceeds of the offering will be approximately $323.0 million, after deducting placement agent fees and estimated offering expenses payable by Apellis. Apellis intends to use $43.1 million of the net proceeds from the offering to pay the cost of the capped call transactions entered into in connection with the private placement. Apellis intends to use the remainder of the net proceeds from the sale of the notes to fund clinical development of pegcetacoplan, including preparation of a new drug application submission, to support the potential commercialization of pegcetacoplan, if Apellis decides to commercialize on its own, including the build-out of a commercial infrastructure and sales force, to procure clinical and commercial supply of pegcetacoplan, to conduct research activities and for working capital and other general corporate purposes.

J. Wood Capital Advisors LLC is acting as sole placement agent in connection with the private placement.

The offer and sale of the notes and the shares of common stock issuable upon conversion of the notes, if any, have not been and will not be registered under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction, and the notes and any such shares may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

This press release shall not constitute an offer to sell, or a solicitation of an offer to buy the notes, nor shall there be any sale of, the notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of any such state or jurisdiction.