PAOLI, Pa., Nov. 02, 2016 (GLOBE NEWSWIRE) -- TetraLogic Pharmaceuticals Corporation (NASDAQ:TLOG) (“TetraLogic”
or “Company”), a clinical-stage biopharmaceutical company focused on discovering and developing novel small molecule therapeutics
in oncology and infectious diseases, today announced that it has entered into an asset purchase agreement with Medivir AB (Nasdaq
Stockholm:MVIR) (“Medivir”) to sell its SMAC mimetic program, including its clinical stage asset birinapant, and its topical HDAC
inhibitor, SHAPE, to Medivir (the “Sale”).
In consideration Medivir is expected to pay $12 million in cash upon closing of the transaction as well as
future milestones of up to $153 million based on the development and commercialization of TetraLogic’s product candidates and
earn-out payments which become payable upon achievement of specified annual sales.
The transaction, which was approved by the Board of Directors, is expected to close by the end of the fourth
quarter of 2016. Closing is subject to certain conditions, including the approval of TetraLogic’s shareholders and of the
holders of TetraLogic’s convertible debt (“Senior Notes”).
In connection with the Sale, the holders of the Senior Notes agreed to exchange $2.2 million in principal amount
of the Senior Notes for 12,222,222 shares of newly issued convertible participating series A preferred stock, with certain
preferential dividends and liquidation preferences. Following this exchange, approximately $41.5 million in aggregate
principal amount of Senior Notes will remain outstanding, plus accrued but unpaid interest on all Senior Notes.
Each share of preferred stock will accrue dividends at the rate of 8%, payable in priority to any dividend or
other distribution on the Common Stock. The preferred stock will have voting rights equivalent to one share of the Company’s
common stock, par value $0.0001 per share (the “Common Stock”), and will vote on an as-converted basis as a single class with the
holders of Common Stock.
The holders of Senior Notes have agreed to vote their shares of preferred stock in support of the Sale.
Shareholders of the Company holding approximately 17.48% of the outstanding shares of capital stock entitled to vote have signed
voting agreements in support of the Sale. Collectively therefore, holders of shares representing approximately 50.72% of the
shares of capital stock entitled to vote will have agreed to vote their shares in favor of the Sale.
Under its agreement with the holders of Senior Notes, the Company has agreed to use the $12 million cash
proceeds received at closing of the Sale to redeem $12 million in aggregate principal amount of the Senior Notes then outstanding.
The holders of the Senior Notes have also agreed to extend the maturity date of the Senior Notes to June 15, 2024 and to
receive interest payments in additional Senior Notes in lieu of cash.
As a result of the Sale, the Company will be terminating all remaining employees, with all terminations expected
to be completed no later than December 1, 2016.
On November 2, 2016, the Company received a letter from The Nasdaq Stock Market LLC (“Nasdaq”) that it
determined to delist the Company’s Common Stock and that it will suspend trading of the Company’s Common Stock effective at the
open of business on November 4, 2016.
The Company’s Board of Directors determined, after careful consideration and in light of the Sale, that
voluntarily delisting and deregistering is in the overall best interests of the Company and its shareholders. Factors that the
Board of Directors considered include the inability of the Company to regain compliance with continued listing requirements of
Nasdaq, the costs associated with satisfying its ongoing reporting obligations and the nominal trading price and limited trading
activity of its Common Stock.
In connection with the Sale, the Company is submitting a notice to Nasdaq of its intention to voluntarily delist
its Common Stock, from The Nasdaq Global Market and to deregister its Common Stock under Section 12(b) of the Securities Exchange
Act of 1934, as amended. The Company intends to file a Notification of Removal from Listing and/or Registration on Form 25
with the Securities Exchange Commission (“SEC”) as soon as permissible thereafter unless previously filed by Nasdaq and expects
that the Common Stock will cease to be listed on The Nasdaq Global Market 10 days after the filing of Form 25.
The Company previously reported that it had received notice from Nasdaq informing the Company that it was not in
compliance with (i) the minimum Market Value of Listed Securities requirements set forth in Nasdaq Listing Rule 5450(b)(2)(A); (ii)
the $1.00 Minimum Bid Price requirement as set forth in Nasdaq Listing Rule 5450(a)(1); and (iii) the minimum $15 million market
value of publicly-held shares requirement set forth in Nasdaq Listing Rule 5450(b)(2)(C). Following a hearing before the
Nasdaq hearing panel (“Panel”) to appeal a delisting determination by Nasdaq, the Company received notice
that the Panel granted the Company’s request for continued listing on The Nasdaq Global Market subject to certain conditions,
including completion of a conversion of its Senior Notes into equity of the Company by October 15, 2016 (the “Restructuring”).
On October 18, 2016, the Company received notice that the Panel had granted the Company’s request for an extension till
October 31, 2016 for completion of the Restructuring.
Forward-Looking Statements
Some of the statements in this press release and other written and oral statements made from time to time by
TetraLogic and its representatives are “forward-looking statements” within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements regarding
the closing of the Sale, the exchange of the Senior Notes into preferred stock, cost savings and other benefits expected to be
derived from the delisting and deregistration and the intent and belief or current expectations of TetraLogic and its management
team. Such statements may be identified by the use of words like “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”,
“plan”, “will”, “should”, “seek”, the negative of these terms or other comparable terminology. Investors are cautioned that any
such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual
results may differ materially from those projected in the forward-looking statements. For example, there can be no assurances that
TetraLogic will successfully complete the Sale or the exchange of the Senior Notes. Investors should read carefully the
factors described in the “Risk Factors” section of TetraLogic’s filings with the SEC, including TetraLogic’s Form 10-K for the year
ended December 31, 2015, for information regarding risk factors that could affect TetraLogic’s results. The forward-looking
statements contained in this press release speak only as of the date of this press release and TetraLogic undertakes no obligation
to publicly update any forward-looking statements to reflect changes in information, events or circumstances after the date of this
press release, unless required by law.
Additional Information
This press release is being made in respect of the Sale. The proposed Sale will be submitted to the shareholder
of the Company for their consideration. In connection with the proposed Sale, the Company will file a proxy statement with the SEC.
This press release does not constitute a solicitation of any vote or proxy from any shareholder of the Company. INVESTORS ARE
URGED TO READ THE PROXY STATEMENT CAREFULLY AND IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS OR
MATERIALS FILED OR TO BE FILED WITH THE SEC OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE SALE. The final proxy statement will be mailed to the Company’s shareholders. In addition, the
proxy statement and other documents will be available free of charge at the SEC’s internet website, www.sec.gov. When available, the proxy statement and other pertinent documents also may be
obtained free of charge at the Company’s website, http://tetralogicpharma.com/, or by directing a written request to TetraLogic Pharmaceuticals
Corporation, Attn: Secretary, in writing, at P.O. Box 1305, Paoli, PA 19301.
The Company and its directors, executive officers and other members of management and employees may be deemed to
be participants in the solicitation of proxies in connection with the proposed Sale. Information about the Company’s directors
and executive officers is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the
SEC on March 16, 2016 and the proxy statement for the Company’s 2015 annual meeting of shareholders, filed with the SEC on April
28, 2016. Additional information regarding these persons and their interests in the transaction will be included in the proxy
statement relating to the proposed Sale when it is filed with the SEC. These documents can be obtained free of charge from the
sources indicated above.
CONTACT: Kevin Buchi E-mail: Kevin.Buchi@tetralogicpharma.com
