Tomahawk, WI 04/08/2014 (Basicsmedia) – PDL BioPharma Inc. (NASDAQ:PDL) announced yesterday, that it had acquired $150 million of Notes due 2029, from Accel 300, LLC, a completely owned subsidiary of kaleo, Inc. (formerly Intelliject, Inc).

The Notes

The Notes are said to be backed by 100% of royalties from kaleo’s first product, Auvi-Q (Allerject in Canada). Further, they are also backed by 10% of the net sales of the second proprietary auto-injector product, by kaleo, EVZIO. These are collectively called the Revenue Interests.

The Notes will also carry an interest at 13% per annum, paid quarterly on the outstanding principal. The principal balance of the Notes is repaid in a way that the Revenue Interests exceed the quarterly interest payment. The maturity of the Notes is March 2029, but PDL BioPharma Inc. (NASDAQ:PDL) believes that they will be repaid in 2020, as forecasted revenues suggest that for the Revenue Interests, they will exceed the quarterly caps in most of the quarters. Kaleo has the right to redeem the Notes any time, subject to a redemption premium. The Notes happened to be secured by the Revenue Interests. Money from this transaction will be used by kaleo to pay existing indebtedness. Also they will be used for the commercialization of EVZIO and for the development of its future pipeline of its products. This deal was funded by PDL with the help of the existing cash it had.

Both CEOs give their thoughts

John McLaughlin, CEO and president of PDL BioPharma Inc. (NASDAQ:PDL) talked of the uniqueness of kaleo’s business model and its patient driven product development. He also mentioned that the Auvi-Q and EVZIO were novel products and expects that there are more exciting products to come in the future.

Kaleo’s CEO and president, Spencer Williamson said that they were pleased to collaborate with PDL and were looking forward to the company’s growth with EVZIO’s market launch and also the development of their pipeline programs.

Auvi-Q is currently approved by the FDA, and is used to treat life threatening allergy reactions in people, who are at a risk or have a history of such issues.

PDL BioPharma Inc. (NASDAQ:PDL)’s stock prices closed at $8.20 yesterday, a 1.74% rise over their previous close.

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