Karyopharm Announces Major Refinancing and Extended Debt Maturities

Karyopharm Therapeutics Inc., a pharmaceutical company focused on cancer therapies, revealed a series of financial maneuvers aimed at extending the company’s debt maturities into 2028 and 2029. This strategic move is designed to fortify the company’s balance sheet, aligning with its pivotal Phase 3 data readouts expected in 2025.

On May 8, 2024, Karyopharm finalized agreements with leading stakeholders, including Braidwell LP, Highbridge Capital Management, LLC, Davidson Kempner Capital Management LP, and Context Capital Management. The agreements involve exchanging approximately $148.0 million of the outstanding 3.0% Convertible Notes due in 2025 for around $111.0 million of newly issued 6.0% Convertible Notes maturing in 2029, supplemented with warrants to purchase about 46.0 million shares of Karyopharm’s common stock at an exercise price of $1.10 per share. This exchange is expected to close around May 13, 2024, subject to customary conditions.

Additionally, HealthCare Royalty Management, LLC (HCRx) will purchase $5.0 million of the new 2029 Convertible Notes, satisfying part of Karyopharm's existing obligations to HCRx. These notes will convert into common stock shares at an initial conversion rate of 444.4444 shares per $1,000 principal amount, equating to a conversion price of $2.25 per share, which is a premium of approximately 105% above the company's stock closing price on May 7, 2024.

Simultaneously, Karyopharm secured a new $100.0 million senior secured term loan maturing in 2028. The Secured Term Loan, funded by existing 2025 Convertible Note holders and HCRx, includes $85.0 million from the note holders and $15.0 million from HCRx, satisfying $15.0 million in existing obligations to HCRx. The loan accrues interest at the Secured Overnight Financing Rate (SOFR) plus 9.25%, with amortization payments starting 24 months post-closing.

The proceeds from this term loan will be utilized to repay $49.5 million in royalty payment obligations to HCRx, reducing the maximum amount owed to HCRx to $128.3 million. The remaining funds, approximately $30.0 million, will cover transaction expenses and support ongoing and planned clinical trials.

Further, the Financing Agreement with HCRx was amended on the term loan's closing date. Karyopharm made a $49.5 million cash payment to HCRx, issued a $15.0 million Secured Term Loan note to HCRx, and delivered $5.0 million of the 2029 Convertible Notes to HCRx. Consequently, the royalty rate on Karyopharm's global net revenue from selinexor and future products was adjusted from a tiered rate to a flat 7.0%.

Karyopharm's President and CEO, Richard Paulson, expressed satisfaction with these transactions, highlighting the strengthened financial position aligning with important regulatory milestones. The refinancing is seen as a strong endorsement from stakeholders like HealthCare Royalty and major convertible note holders, enhancing Karyopharm's potential to advance its lead compound, selinexor.

Karyopharm will discuss the financial results for Q1 2024 and these transactions in a conference call on May 8, 2024. The company remains focused on developing its pipeline, targeting various cancers with significant unmet needs.

Karyopharm Therapeutics, listed on Nasdaq under the symbol KPTI, leads in cancer therapy innovation, particularly through oral compounds addressing nuclear export dysregulation, a key mechanism in cancer progression. Their lead drug, XPOVIO® (selinexor), is approved in the U.S. for three oncology indications and has gained regulatory approval in several international markets. Karyopharm's ongoing research targets multiple myeloma, endometrial cancer, myelofibrosis, and diffuse large B-cell lymphoma, reflecting their commitment to developing effective cancer treatments.