03
Oct

Valeritas Reduces its Long-Term Debt Obligation Nearly 60% by Exchanging $25.0 Million of Debt for Series B Convertible Preferred Stock

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Valeritas Holdings, Inc. (NASDAQ: VLRX), a medical technology company and maker of the V-Go® Wearable Insulin Delivery device, which uses its proprietary h-Patch™ technology, announced today the restructuring of a substantial portion of its outstanding long-term debt, reducing the total debt balance by an aggregate of $25.0 million.

Under the terms of the debt restructuring, $25.0 million of Valeritas senior secured long-term debt held by CR Group L.P. (CRG) affiliated funds and another creditor was exchanged for newly created Valeritas Series B Convertible Preferred Stock, the terms of which are disclosed in a Form 8-K to be filed with the SEC. The debt exchange reduces the outstanding balance of senior secured debt to approximately $17.0 million. The debt restructuring is expected to save Valeritas approximately $8.0 million in cash interest expense payments through March 2022.

Valeritas President and CEO, John Timberlake, stated, “As we continue to see strong momentum in V-Go prescriptions from both our tenured sales representatives and our newly hired sales representatives, we were able to work with our creditors to significantly reduce our long-term debt obligations. The reduction in our long-term debt obligations by nearly 60% and the elimination of any cash interest payments until maturity, will result in greater financial flexibility, significant cash savings, and better positions us to continue to drive sales growth across our 75 territories in the U.S.”

Separately, Valeritas expects to record revenue for the third quarter ended September 30, 2019 of approximately $8.5 million, as U.S. revenue grew approximately 30% over the third quarter of 2018. The Company also reiterated its 2019 annual revenue guidance of $31.0 to $33.0 million. The Company expects gross margin and operating expenses to be approximately 50% and between $17.2 million and $17.7 million for the third quarter of 2019, respectively. Cash and cash equivalents are expected to be approximately $23 million at September 30, 2019 and total liabilities are expected to be approximately $40 million at September 30, 2019, down $20 million from June 30, 2019, primarily due to the reduction in long-term debt. Total liabilities at September 30, 2019 are inclusive of a backend facility fee associated with the restructured debt.

Mr. Timberlake continued, “We remain confident in our revenue expectations for 2019 as V-Go prescription rates continue to accelerate. Additionally, we are excited by the prospects of regulatory clearance for use of U-100 Regular Human Insulin (RHI) in V-Go, as well as the results of our pharmacokinetic (PK) studies using our h-Patch™ technology to deliver Cannabidiol (CBD) and Apomorphine (APO) which will be presented at several industry conferences.”

Based upon recent regulatory feedback from the U.S. FDA, we intend to file a 510K for our V-Go SIMTM blue-tooth Accessory Product in the first quarter of 2020, which we expect to launch immediately upon clearance by the FDA.

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