Windtree Therapeutics, Inc. (OTCQB: WINT), a biotechnology company focused on developing aerosolized KL4 surfactant therapies for respiratory diseases, and LPH Investments Limited, a wholly-owned subsidiary of Lee's Pharmaceutical Holdings Limited ("Lee's Pharm," SEHK Stock Code: 0950), today announced that they have completed a financial restructuring of Windtree that includes a purchase by Lee's Pharm via LPHIL of $10 million of Windtree's common stock, giving Lee's Pharm a controlling interest in Windtree, and a simultaneous restructuring and retirement of $25 million of long-term debt under the 2013 secured loan facility agreement between Windtree and affiliates of Deerfield Management Company, L.P. ("Deerfield"). The completion of these transactions improves Windtree's balance sheet and better positions the Company to raise the capital needed to fund continued development of AEROSURF® for respiratory distress syndrome (RDS) and potentially its pipeline of surfactant products utilizing its proprietary KL4 surfactant and aerosol device technologies.
"The successful completion of this financial restructuring is significant for Windtree. We now have a capital structure free of the financial overhang of long-term debt, and are better positioned to secure the additional capital necessary to realize the full potential of our KL4 surfactant and aerosol delivery platforms beginning with AEROSURF," said Craig Fraser, President and Chief Executive Officer of Windtree. "Strategically, our broader collaboration with Lee's Pharm expands our revenue potential and provides options to access capital from new markets and opportunities to diversify and build a broader portfolio."
Under terms of the share purchase agreement, LPHIL purchased from Windtree $10 million of common stock to acquire a controlling interest of the Company at a price per share of $0.2163, representing a 15 percent premium to the average 10-day volume weighted average price per share (VWAP) through October 27, 2017. As partial consideration for the share purchase, Lee's Pharm cancelled $3.9 million principal outstanding under an August 2017 loan agreement, which Lee's Pharm had advanced in three equal installments in August, September, and October, 2017, to support AEROSURF development activities and sustain Windtree's operations through October 31, 2017, while the parties negotiated the share purchase agreement.
To facilitate the share purchase by Lee's Pharm, Deerfield agreed to restructure its $25 million secured loan to Windtree effective as of the closing of the share purchase agreement. Under the loan restructuring agreement, in exchange for return and cancellation of the Deerfield notes, Windtree paid to Deerfield $2.5 million in cash, and issued to Deerfield shares of common stock representing two percent of Windtree's common stock post-closing on a fully-diluted basis, as defined in the loan restructuring agreement. In addition, Deerfield will be entitled to receive up to $15 million in future AEROSURF regulatory and commercial milestones, beginning with the filing for marketing approval in the United States.
"We firmly believe that Windtree's KL4 surfactant platform represents a significant opportunity in China and elsewhere globally, with near-term potential that can be realized with the commercialization of SURFAXIN for RDS in FDA reference countries and even greater potential with SURFAXIN LS and especially AEROSURF in the future," said Dr. Benjamin Li, Chief Executive Officer of Lee's Pharm. "It has long been our goal to globalize our business and have a majority interest in a public U.S. company that would strengthen our position in critical neonatal care and potentially allow us to further expand the reach of our acute pulmonary care portfolio. This transaction, and the potential it represents, comes at a value we could not ignore. The strength of Windtree's management and revenue potential of its portfolio provide an opportunity that we are both confident in and very excited about."
About Windtree Therapeutics
Windtree Therapeutics, Inc. is a clinical-stage biotechnology company focused on developing novel surfactant therapies for respiratory diseases and other potential applications. Windtree's proprietary technology platform includes a synthetic, peptide-containing surfactant (KL4 surfactant) that is structurally similar to endogenous pulmonary surfactant and novel drug-delivery technologies being developed to enable noninvasive administration of aerosolized KL4 surfactant. Windtree is focused initially on improving the management of respiratory distress syndrome (RDS) in premature infants and believes that its proprietary technology may make it possible, over time, to develop a pipeline of KL4 surfactant product candidates to address a variety of respiratory diseases for which there are few or no approved therapies.
For more information, please visit the Company's website at www.windtreetx.com.
