Annual report pursuant to Section 13 and 15(d)

Subsequent Events

Subsequent Events
12 Months Ended
Dec. 31, 2021
Subsequent Events [Abstract]  
Subsequent Events

21. Subsequent Events

VYNE Therapeutics Product Acquisition (“VYNE Product Acquisition”)

On January 13, 2022 Journey entered into a definitive agreement with VYNE Therapeutics, Inc. (“VYNE”) to acquire its Molecule Stabilizing Technology (“MST”)™ franchise for an upfront payment of $20.0 million and an additional $5.0 million on the one (1)-year anniversary of the closing. The agreement also provides for contingent net sales milestone payments. The Company acquired Amzeeq (minocycline) topical foam, 4%, and Zilxi (minocycline) topical foam, 1.5%, two FDA-Approved Topical Minocycline Products and Molecule Stabilizing Technology (MST)™.

Maruho Milestone Payment

On February 11, 2022, Journey announced that its exclusive out-licensing partner in Japan received manufacturing and marketing approval in Japan for Rapifort® Wipes 2.5% (Japanese equivalent to U.S. FDA approved Qbrexza®) for the treatment of primary axillary hyperhidrosis, triggering a net $2.5 million milestone payment to Journey. The net payment reflects a milestone payment of $10 million to Journey from their exclusive licensing partner in Japan, Maruho Co., Ltd. (“Maruho”), offset by a $7.5 million payment to Dermira, Inc., pursuant to the terms of the Asset Purchase Agreement between Journey and Dermira Inc.  In conjunction with the terms of the licensing agreement with Maruho, the milestone payment was due from Maruho within 30 days of the approval. Journey acquired global rights to Qbrexza® from Dermira Inc. in 2021.

Amendment to the East West Bank Working Capital Line of Credit

On January 12, 2022, Journey entered into a third amendment (the “Amendment”) of its loan and security agreement with East West Bank, which increased the borrowing capacity of Journey’s revolving line of credit to $10.0 million, from $7.5 million, and added a term loan not to exceed $20.0 million. Both the revolving line of credit and the term loan mature on January 12, 2026.  The term loan includes two tranches, the first of which is a $15.0 million term loan and the second of which is a $5.0 million term loan. On January 12, 2022, Journey borrowed $15.0 million against the first tranche of the term loan to facilitate the VYNE Product Acquisition.  The term loan bears interest on its outstanding daily balance at a floating rate equal to 1.73% above the prime rate and is payable monthly, on the first calendar day each month. The term loans contain an interest only payment period through January 12, 2024, with an extension through July 12, 2024 if certain covenants are met, after which the outstanding balance of each term loan is payable in equal monthly installments of principal, plus all accrued interest, through the term loan maturity date.  Journey may prepay all or any part of the term loan without penalty or premium, but may not re-borrow any amount, once repaid. Any outstanding borrowing against the revolving line of credit bears interest at a floating rate equal to 0.70% above the prime rate. The Amendment includes customary financial covenants such as collateral ratios and minimum liquidity provisions as well as audit provisions.

Runway Growth Capital LLC Debt Facility

On March 8, 2022, Mustang announced completion of a $75 million long-term debt facility with Runway Growth Capital LLC (“Runway”).  Of the $75 million, $30 million was funded upon closing, and the additional $45 million available under the facility may be funded upon Mustang’s achieving certain predetermined milestones.  The loan will be repaid in sixty monthly payments consisting of 24 monthly payments of interest only, followed by 36 monthly payments of principal and accrued interest, payable monthly in arrears, with all repayments ending on the same date as the initial tranche.  The interest-only period may be extended to 36 months contingent upon Mustang achieving certain milestones.  In connection with the debt financing, Mustang issued to Runway warrants to purchase up to 748,036 of its common shares at an exercise price of $0.8021 per share.  Proceeds from the facility will be used to support the ongoing clinical development of key investigational product candidates within Mustang’s pipeline and for general working capital purposes.