BioPharma Credit to invest $325mn in Collegium Pharmaceuticals

LONDON, UK: BioPharma Credit (LSE: BPCR) t, through its fully owned subsidiary, together with BioPharma Credit Investments V (Master) LP, has provided Collegium Pharmaceutical Inc. (Nasdaq: COLL) a commitment to enter into a new $650 million senior secured term loan agreement.

Proceeds from the new loan will be used to fund Collegium’s proposed acquisition of BioDelivery Sciences International Inc. (Nasdaq: BDSI), as well as to repay the outstanding debt of Collegium and BDSI.

Under the terms of the new loan agreement, upon the closing of the M&A Transaction, the Company will invest US$325 million in a single drawing and BioPharma-V will invest US$325 million in parallel, with the company acting as collateral agent.

The four-year loan will have US$100 million in amortization payments during the first year and the remaining US$550 million balance will amortize in equal quarterly installments.

The loan will bear interest at 3-month LIBOR plus 7.50 per cent per annum subject to a 1.20 per cent floor along with a one-time additional consideration of 2.00 per cent of the loan amount payable at signing and 1.00 per cent of the loan amount payable at funding.

TBioPharma Credit intends to fund this investment from current cash on hand, US$ 102 million, proceeds from the BDSI and Collegium repayment as well as drawing on its credit facility with JPMorgan Chase bank. As part of this transaction and in anticipation of other potential investments, the Company intends to increase the committed amount under the facility from US$50 million to US$200 million using the facility’s accordion feature.

On 29 May 2019 BioPharma Credit entered into a senior secured term loan agreement with BioDelivery Sciences International and ultimately funded US$80 million in two tranches. During 2021 BDSI repaid US$20 million resulting in a current balance of US$60 million.

Upon the closing of the M&A Transaction, BDSI will be required to repay the US$60 million balance together with accrued interest and a 2.0% prepayment fee.

Also, in May 2019 the Company acquired 5.0 million shares of BDSI at US$5.00 each and sold 2.3 million shares during 2019 at an average price of US$6.60 per share. Upon closing of the M&A Transaction, the Company will receive cash consideration of US$5.60 per share or US$15 million in total.

On 7 February 2020 the Company and BioPharma-V entered into a US$200 million senior secured term loan agreement with Collegium and the Company initially invested US$165 million. To date, Collegium has repaid US$88 million through scheduled amortizations resulting in a current balance of US$112 million.

Upon the closing of the M&A Transaction, Collegium will be required to repay the Lenders the remaining US$112 million balance, of which US$93 million is owed to the Company, together with accrued interest. There will not be a prepayment fee.

Collegium Pharmaceutical is a publicly traded, biopharmaceutical company focused on developing and commercializing new medicines for responsible pain management with a current market capitalization of ~US$608 million.

BDSI is a publicly traded biopharmaceutical company that currently markets BELBUCA® (buprenorphine buccal film), a Schedule III partial opioid agonist for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment, Symproic (naldemedine) for the treatment of opioid-induced constipation (OIC), and ELYXYBTM (celecoxib oral solution) for the treatment of migraine with or without aura. Schedule III medicines are considered by the U.S. Drug Enforcement Agency (DEA) to have less potential for abuse than Schedule II medicines such as fentanyl, hydrocodone, morphine and oxycodone.

Pedro Gonzalez de Cosio, CEO of Pharmakon Advisors, LP, the Company’s investment manager commented: “We are pleased to continue to build upon our successful partnership with Collegium Pharmaceutical through this transaction. Starting with a US$575 million loan to Depomed, Inc. structured by Pharmakon in 2015 to fund the original acquisition of Nucynta from Johnson & Johnson, followed by the initial loans by the Lenders to Collegium and BDSI, this is Pharmakon’s fourth loan secured by these meaningfully differentiated products that treat moderate to severe pain.”

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