Idorsia Calls for Bondholder Meeting to Extend Cash Runway

Idorsia Ltd (SIX: IDIA), a Swiss biopharmaceutical company, has announced its intention to call a bondholder meeting for holders of its outstanding convertible bond maturing on July 17, 2024. The company is proposing a change to the current terms and conditions of the bond to avoid potential liquidity constraints in connection with the redemption of the bonds at maturity. The proposed changes include:

* Amending the conversion price to CHF 6.00 (from CHF 33.95)
* Extending the maturity date by six months to January 17, 2025
* Giving Idorsia the option to call the bonds at par, in full or in part, at any time upon giving ten trading days' notice

Idorsia's main investors, Jean-Paul and Martine Clozel, have expressed their commitment to voting in favor of the proposals to amend the terms of the bonds. The company has appointed J.P. Morgan Securities plc to act as Dealer Manager for the bondholder solicitation process.

The financial status as of March 31, 2024, required for the bondholder meeting, will be made public on April 17, 2024, and is expected to be published concurrently with the invitation to the bondholder meeting. The bondholder meeting is expected to take place on April 30, 2024.

Idorsia has also postponed the publication of its audited Full-Year 2023 Financial Results as well as the Q1 2024 Financial Results from the currently scheduled April 25, 2024, to May 21, 2024. The SIX Exchange Regulation (SER) granted Idorsia a request for extension of the 2023 publication and submission of the Annual Report until May 31, 2024.

Idorsia's Chief Executive Officer, André C. Muller, commented on the situation: "Exclusive negotiations with the undisclosed party for global rights to aprocitentan continue, but it is unlikely that an agreement will be reached in the coming weeks. Regardless of the outcome, given the near-term maturity and the inability of the company to repay the bonds at maturity, an extension to the CB 2025 is required, so a bondholder meeting will be called in the coming days. This extension is expected to be a first step in a larger restructuring in which we would amend the terms of both the convertible bonds 2025 and 2028."

Idorsia's Chief Financial Officer, Arno Groenewoud, added: "We ended 2024 with a cash balance exceeding 100 million Swiss francs thanks, in part, to the sale of daridorexant inventory to Nxera and a royalty monetization transaction for vamorolone with R-Bridge Healthcare Fund. As a result, the company has a cash runway to the end of the first quarter 2025, assuming we are able to extend the maturity of the CB2025."

In conclusion, Idorsia's decision to call for a bondholder meeting to extend the maturity of its convertible bond is a strategic move aimed at avoiding potential liquidity constraints and extending the company's cash runway. The proposed changes to the bond's terms and conditions, along with the company's recent transactions, are expected to help Idorsia maintain its financial stability and continue its operations. Investors should closely monitor the developments surrounding Idorsia's bondholder meeting and the company's financial performance.