MONTREAL, QUEBEC and MISSISSAUGA, ONTARIO -- (Marketwired) -- 06/17/13 -- Paladin Labs Inc. (TSX: PLB), a leading specialty pharmaceutical company and Nuvo Research Inc. (TSX: NRI), a specialty pharmaceutical company dedicated to building a portfolio of products for the topical treatment of pain and the development of its immune modulating drug candidate WF10, today announced that they have amended their loan arrangements (the "Loan") originally agreed to in May 2012. In May of 2012, Nuvo drew down the first $4.0 million tranche of the Loan which has been paid down to its current principle balance of $2.0 million.
Under the terms of the amended arrangements, Nuvo is entitled to draw down a second $4.0 million loan tranche immediately and a third $4.0 million loan tranche upon the occurrence of both the (i) launch of Pennsaid® 2% in the U.S. by Nuvo's U.S. marketing partner, Mallinckrodt Inc. and (ii) Pliaglis global annual sales achieving a US$5.0 million run rate. Certain repayment and default provisions have also been amended. The new tranches of the Loan, as with the first tranche, will bear interest at 15% per annum.
Paladin will be issued warrants to acquire 50,000 Nuvo common shares at 130% of the 5-day trailing value weighted average trading price ("VWAP") of Nuvo common shares on the Toronto Stock Exchange. If Nuvo exercises its option to draw down the third tranche of the Loan, Paladin will be entitled to be issued warrants to acquire a further 50,000 Nuvo common shares at 130% of the VWAP of Nuvo common shares as of the date that Nuvo draws down the third tranche. The warrants will expire 3 years from their date of issue.
Paladin will have the right to license the marketing rights to Nuvo's immune modulation drug candidate, WF10, for Canada, South America and Central America (the "Paladin Territories"). The terms of the license will be the same as commercial terms under any WF10 license from Nuvo to a third party for another territory adjusting any upfront or milestone payments for the proportionate share of total pharmaceutical sales in the Paladin Territories relative to the total pharmaceutical sales in the territory licensed to the third party. Paladin's right to license WF10 for Paladin Territories will not apply if Nuvo enters into a global WF10 licensing transaction.
The transactions are subject to typical conditions including regulatory approval and are expected to be completed within the next 60 days.
"This loan facility from Paladin provides Nuvo with financial resources to advance our WF10 allergic rhinitis program and for general corporate purposes so we can continue to execute on our business plan," said Stephen Lemieux, Nuvo's Vice-President and Chief Financial Officer. "We very much appreciate the support of our marketing and financial partner, Paladin Labs, to help us achieve our goals."
"We are pleased to continue to support Nuvo in the development of WF10 and the expansion their pain franchise which is led by Pennsaid," said Mark Beaudet, interim President and Chief Executive Officer.
About Pennsaid 2%
Pennsaid 2% is a topical non-steroidal anti-inflammatory drug (NSAID) containing 2% diclofenac sodium compared to 1.5% for original Pennsaid. It is more viscous than original Pennsaid, is supplied in a metered dose pump bottle and was studied in clinical trials using twice daily dosing compared to four times a day for original Pennsaid.
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