Apellis Pharmaceuticals Secures $475 Million Non-Dilutive Credit from Sixth Street to Refinance Debt

Apellis Pharmaceuticals, Inc. has announced a significant financial arrangement involving a senior secured credit facility with Sixth Street, a prominent global investment firm. The agreement provides Apellis access to up to $475 million, with an initial $375 million funded at closing. The facility also includes an option for Apellis to draw an additional $100 million before September 2025, contingent upon meeting certain conditions. Furthermore, Apellis has the ability to secure another $100 million through a separate third-party working capital facility.

The majority of the initial proceeds from this arrangement were allocated to settle an existing development liability with SFJ Pharmaceuticals, amounting to approximately $326 million. This buyout eliminates $366 million in payments that Apellis owed to SFJ through 2027, including around $200 million due by 2025. After accounting for this buyout and other related transaction expenses, Apellis will have net proceeds of approximately $32 million.

Tim Sullivan, the Chief Financial Officer of Apellis, remarked that this transaction positions the company to potentially achieve positive cash flow without needing to access capital markets, describing it as a pivotal milestone for Apellis. He highlighted the significance of partnering with Sixth Street, a top-tier capital provider in the life sciences sector, which indicates strong confidence in Apellis' business and its potential to generate long-term shareholder value.

Jeff Pootoolal, a partner at Sixth Street, expressed enthusiasm for supporting Apellis, particularly applauding the commercialization of SYFOVRE® (pegcetacoplan injection), which in its first year has significantly benefited many individuals with geographic atrophy in the U.S. He emphasized the potential for SYFOVRE® to aid millions of patients globally and reaffirmed Sixth Street's commitment to assisting Apellis in achieving its commercial and development goals.

The credit facility, which matures on May 13, 2030, carries an annual interest rate pegged to the 3-month Secured Overnight Financing Rate (SOFR) plus 5.75%, subject to a 1.00% floor. There are no scheduled amortization payments during its term, with the principal due at maturity. The obligations under this facility are secured by substantially all of Apellis' assets and include specific affirmative and negative covenants typical for such arrangements.

As of March 31, 2024, Apellis reported holding cash and cash equivalents totaling $325.9 million. TD Cowen and Wilmer Hale served as financial and legal advisors, respectively, to Apellis, while Proskauer Rose LLP provided legal counsel to Sixth Street.

To provide context, Apellis' collaboration with SFJ Pharmaceuticals began in February 2019, aimed at developing pegcetacoplan for treating paroxysmal nocturnal hemoglobinuria (PNH). SFJ, backed by Blackstone Life Sciences and Abingworth, funded the Phase 3 program with $140 million. Following regulatory approvals from the U.S. Food and Drug Administration and the European Medicines Agency in 2021, Apellis was required to pay SFJ a total of $460 million in predetermined annual payments. As of March 31, 2024, Apellis had paid SFJ $94 million.

Sixth Street is an investment firm managing over $75 billion in assets and committed capital. It employs long-term flexible capital and data-enabled capabilities to invest across various growth stages in healthcare and life sciences sectors. Some of its notable investments include Arsenal Biosciences, Biohaven, and Blueprint Medicines. Sixth Street was founded in 2009 and operates with a team of over 600 professionals worldwide.

Apellis Pharmaceuticals is a global biopharmaceutical company focused on developing therapies for challenging diseases. It has pioneered the first new class of complement medicine in 15 years and has two approved treatments targeting C3, including the first-ever therapy for geographic atrophy. The company aims to explore further potential in targeting C3 for serious retinal, rare, and neurological diseases.