Despite efforts to solve its credit woes, Impel Pharmaceuticals is still staring down the barrel of bankruptcy, launching a last-ditch attempt to save itself and search for strategic alternatives, including a potential sale.
The Seattle-based company hopes to secure a potential sale of assets, sale of the company or a merger, among other options, by early 2024 at the latest. If the company is unable to complete a transaction, it may need to seek additional financing or other alternatives for restructuring and resolving its liabilities—which are plentiful.
To understand Impel’s current position, we have to go back to 2021 when the company went public to secure funding for launching its intranasal migraine drug Trudhesa. The drug snagged FDA approval later that year, succeeding where MAP Pharmaceuticals and Allergan had failed. However, Trudhesa didn’t hit commercial goals, with Impel hoping to sell 70,000 to 85,000 prescriptions in 2022 but closing out the year at 58,400 total.
To offset the miss, the company axed pipeline programs and reduced its headcount by 16% in February of this year, with Chief Medical Officer Stephen Shrewsbury, M.D., also heading out the door.
The company then got into some hot water with its lender, Oaktree Fund Administration, after failing to file a quarterly financial report. Under the terms of its credit agreement with Oaktree, Impel cannot be the subject of a “going concern” notice and must always have at least $12.5 million in unrestricted cash. Impel breached the first of the clauses in its 2022 annual report but obtained a waiver from the lender.
Impel then breached the second clause of the agreement. The company alerted investors to the risk of a breach earlier this year but said it planned to address the condition in the second quarter, “either through additional equity financings or through other capital sources, including collaborations with other companies or other strategic transactions.” The hoped-for deal never materialized.
Through August, Impel continued to seek out fresh funding, warning that if a deal failed to materialize, the company anticipated exploring “a range of strategic alternatives to maximize stakeholder value," such as a sale of assets or bankruptcy.
While the company has now reached the point of seeking alternatives, it was able to amend the credit agreement with Oaktree to stave off possible bankruptcy. The agreement, which had been previously amended in both August and September of this year, has allowed Impel to draw an additional $2.5 million of tranche B term loans, according to Oct. 2 SEC documents. Impel also has the right to draw up to $10 million more in tranche B term loans by the end of 2023 if it hits certain milestones and conditions.
The newly revised credit agreement also specifies that Impel needs to do everything in its power to secure equity financing before Oct. 31, 2023. If those potential proceeds exceed $5 million, Impel must apply half to repaying the loans.
The freshly inked agreement also requires Impel to appoint an independent director approved by Oaktree and other lenders to its board no later than Oct. 16. Impel has also issued tranche B lenders and their affiliates warrants to purchase a total of 4,749,800 shares of common stock.
As the pressure builds, Impel also has to worry about its stock listing. The biopharma received a notice from Nasdaq on Sept. 28 notifying the company that it had fallen out of compliance with the minimum bid price requirement of $1 per share for 30 days straight. Impel has until March 26, 2024, to regain compliance or risk getting pulled.