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Pernix Reports Closing of Institutional Investment

February 27, 2014

Pernix Therapeutics Holdings, Inc., a specialty pharmaceutical company, announced that it has closed on the issuance of $65 million aggregate principal amount of 8.00 percent Convertible Senior Notes due 2019 to a group of institutional investors led by Athyrium Capital Management, providing the Company with expansion capital for the acquisition of accretive specialty products to be added to the Company's portfolio, as well as for working capital and general corporate purposes.

According to the Company, the Notes, which mature in 2019 unless earlier converted or repurchased, bear interest at a rate of 8.00 percent and are convertible into shares of Pernix common stock at an initial conversion price of $3.60 per share, representing a conversion premium of more than 70 percent over the last reported sale price of Pernix's common stock on the NASDAQ Global Market on February 4. The Notes were issued at a price equal to 100 percent of the principal amount thereof. The net proceeds from the sale of the Notes, after deducting fees and expenses, are expected to be approximately $60.0 million.

Morgan Stanley & Co. acted as placement agent in connection with the convertible debt financing. Perella Weinberg Partners acted as financial advisor in connection with the convertible debt financing.

In connection with the convertible debt financing, the Company, together with its subsidiaries, amended its existing credit agreement with MidCap Financial, and the other lenders party to the agreement to add a $20 million uncommitted accordion feature to the lenders' existing $20 million revolving loan commitment. Pursuant to the amendment, Midcap and the other lenders released their liens on certain assets of the Company and its subsidiaries. The obligations under the agreement are secured by a first priority perfected security interest in the Company's and its subsidiaries' accounts, inventory, deposit accounts, securities accounts, securities entitlements, permits and cash. The amendment also amends certain of the covenants with which the Company and its subsidiaries must comply under the agreement.

"The amended revolver with MidCap, including the additional $20 million uncommitted accordion feature, will provide Pernix with greater financial flexibility to make strategic business decisions," said Douglas Drysdale, President and Chief Executive Officer of Pernix. "We are very pleased to continue our relationship with MidCap."

At the request of the Company, each of Cooper C. Collins, James E. Smith, Jr. and Anthem Blanchard have agreed to resign as members of the Board of Directors, effective as of the closing of the financing, in order to better position the Company to execute on its growth strategy through the addition of independent directors with relevant industry experience.

"On behalf of the entire Board of Directors, I thank Cooper, Jim and Anthem for their many contributions to the Company's success," said Drysdale. "We wish each of them the very best and thank them for their continued support of Pernix."

Smith and Blanchard served as independent directors of Pernix within the meaning of the Listing Rules of the Nasdaq Stock Market. In accordance with the Nasdaq Listing Rules, on February 21, the Company notified Nasdaq that as a result of the resignations of Messrs. Collins, Smith and Blanchard, a majority of the Board of Directors of the Company is not comprised of independent directors as required by Nasdaq Marketplace Rule 5605(b). In accordance with the Nasdaq Listing Rules, the Company must regain compliance with Nasdaq's independent director majority requirement by its 2014 annual meeting of shareholders. The Company is actively pursuing independent director candidates and expects to regain compliance with Nasdaq's independent director majority requirement on a timely basis prior to its 2014 annual meeting of shareholders.

Collins has also resigned as Chief Strategy Officer of Pernix effective as of April 15. "I want to take this opportunity to thank Cooper for his longstanding commitment to Pernix and to recognize all that he has achieved as a founder and former CEO of the Company," said Drysdale.

Athyrium Capital Management, is an asset management company formed in 2008 to focus on investment opportunities in the global healthcare sector.

More Information:

http://www.athyrium.com

http://www.pernixtx.com

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