Intarcia Therapeutics announces closing of $225 million synthetic royalty financing

Intarcia Therapeutics, Inc. today announced the closing of a $225 million synthetic royalty financing with an equity conversion option at a $5.5 billion Company valuation. Plans are to use these funds to accelerate the initiation of additional head-to-head comparative and switch studies of ITCA 650 vs. leading oral and injectable type 2 diabetes therapies. In addition, proceeds from the financing will fund the expected infrastructure and talent required to launch ITCA 650 in the United States, and to advance the Company's recently in-licensed pipeline assets.

Under the terms of the deal, investors have purchased Convertible Limited Recourse Notes from Intarcia and are entitled to receive quarterly payments equal to 1.5% of future global net sales of ITCA 650 until the notes mature or are fully paid. Investors have the option, commencing upon U.S. regulatory approval of ITCA 650 and ending on the later of the second anniversary of the approval or December 31, 2019, to convert their synthetic royalty interests into Intarcia common stock at a conversion price corresponding to an equity valuation of $5.5 billion.

"Our vision and driving belief remains that we can and must discover a new and game-changing way to deliver better medicines, and better health outcomes, with just once- or twice-yearly dosing for chronic diseases," said Kurt Graves, Chairman, President and CEO of Intarcia. "Transforming the status quo trends around poor control, poor compliance and costly outcomes in diabetes is mission critical around the world. Our aim with ITCA 650 is to deliver a once-yearly medicine that succeeds beyond the key efficacy and compliance shortcomings that the majority of patients experience when trying to stick with life-long pills and self-injections," added Graves. "This large and innovative financing announced today is another first-of-its-kind in our industry, and it shows investor confidence in our pivotal data, our partnerships and our overall approach to a huge unmet need and opportunity in type 2 diabetes. We've now secured the financial means to keep 100 percent control of the U.S. commercialization of ITCA 650, with funds needed all the way through the planned approval and early launch period in 2017. In parallel, we are also advancing our product pipeline more aggressively, including our recent Numab collaboration, aiming to develop new once- or twice-yearly antibody-based therapies and combinations for diabetes, obesity and autoimmune diseases."

Morgan Stanley & Co. LLC acted as sole structuring agent to Intarcia on this novel transaction. PhaRMA(SM) is a service mark of Morgan Stanley.