September 02, 2008
AtheroGenics, a pharmaceutical company focused on the treatment of chronic inflammatory diseases, said it will default on a payment for its 2008 convertible notes Tuesday, nor will it make scheduled interest payments on those notes or its 2011 notes.
The company said it has been attempting to restructure the 2008 notes – its 4.5 percent convertible notes – prior to their maturity, but was unable to agree on a restructuring on terms acceptable to the company and the holders of the notes.
"The very large debt burden of the company has created a significant impediment to our ability to effectively develop our primary asset, AGI-1067," said Russell M. Medford, M.D., Ph.D., president and chief executive officer of AtheroGenics, in a news release. "We believe that our actions today appropriately account for the interests of the company's various stakeholders."
AtheroGenics has retained Morgan Stanley to assist it in evaluating restructuring alternatives to its current capital structure. Holders of all three series of convertible notes: the 2008 Notes, the 2011 notes and the 1.5 percent convertible notes due Feb. 1, 2012, have been invited to contact Morgan Stanley for further information.
"We continue to believe that there is a significant medical need and commercial opportunity for our novel lead drug candidate, AGI-1067, which could become the first diabetes treatment with demonstrated cardiovascular safety and the potential to reduce serious cardiovascular events," Medford said.
The company intends to meet with the U.S. Food and Drug Administration in the near term to discuss its plans for the second phase 3 clinical trial of AGI-1067 as a treatment for type 2 diabetes.
The action announced today results in an event of default under the indenture governing the 2008 Notes and creates an event of default under the indentures governing the 2011 Notes and the 2012 Notes. The 2011 Notes and 2012 Notes will be immediately due and payable upon the Company's receipt of written notice from either the trustee for such notes or the holders of not less than 25 percent in aggregate principal amount of each series of notes. The company will be continuing to work with Morgan Stanley to develop a solution that addresses all of its outstanding notes.
Morgan Stanley representatives listed below can be contacted for information:
Simon Morgan at 212-761-2219 or Simon.J.Morgan@morganstanley.com;
Francesco Cipollone at 212-761-1941 or Francesco.Cipollone@morganstanley.com.
AtheroGenics is focused on the discovery, development and commercialization of novel drugs for the treatment of chronic inflammatory diseases, including diabetes and coronary heart disease (atherosclerosis). The company's lead antioxidant and anti-inflammatory drug candidate, AGI-1067, is being studied for the treatment of diabetes and has successfully completed a Phase 3 clinical trial known as ANDES (AGI-1067 as a Novel Anti-Diabetic Agent Evaluation Study). In addition, the company has other clinical and preclinical anti-inflammatory compounds, including AGI-1096, an oral agent for the prevention of organ transplant rejection. For more information about AtheroGenics, visit www.atherogenics.com.
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