JWCA ADVISES APELLIS PHARMACEUTICALS ON THE EQUITIZATION OF an additional $98.1 million of its CONVERTIBLE NOTES

July 2022 | read press release

Transaction Background

In January and July 2021, JWCA advised Apellis (“APLS” or “the Company”) on equitization of ~$327mm (63%) of the 2026 convertibles. The recent high stock price after APLS announced FDA acceptance and priority review of the NDA for Pegacetacoplan for the treatment of Geographic Atrophy presented an opportunity to retire an additional portion of 2026 debt, which allowed Apellis to continue its plan to further de-lever the balance sheet

Apellis’ objectives included:

  • De-lever: retire the convertible to lower debt balance and interest expense

  • Use stock as the consideration to preserve cash

  • Minimize transaction and friction costs; execute as efficiently as possible

  • Minimize market and stock price risk

JWCA acted as Exchange Agent for the transaction and provided analysis and advice around:

  • Evaluate tactics around investor targeting and execution method

  • Balancing exchange considerations to minimize repurchase price and friction costs

  • Investor outreach, negotiation, and execution of exchanges

Results

The Company further de-levered by delivering shares of its stock to retire the convertible:

  • Exchanged $98.1mm of the convertible notes for stock (51% of outstanding). In combination of the exchange executions in 2021, Apellis has now retired 82% of the original $520mm capital raise

  • Minimal transaction cost: the value delivered to investors was only marginally more than what the company already owed (underlying shares + remaining coupons)

  • Minimal stock selling: the majority of the shares delivered to investors are returned to the share lenders

  • Confidential execution: the transaction was negotiated privately with a small group of holders, and the Company knew the economic terms before executing the transaction