UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D. C. 20549
____________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act Of 1934
Date
of
Report (Date of earliest event reported)
___________________________________________________________
ACURA
PHARMACEUTICALS, INC.
(Exact
Name of Registrant as Specified in Charter)
___________________________________________________________
|
State
of New
York
|
1-10113
|
11-0853640
|
|
(State
of Other Jurisdiction
of
Incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer
Identification
Number)
|
616
N. North Court, Suite 120
Palatine,
Illinois 60067
(Address
of principal executive offices) (Zip Code)
(847)
705-7709
(Registrant’s
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d- 2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR
240.13e- 4(c))
Item
1.01 Entry
Into a Material Definitive Agreement
On
August
16, 2006,
the
Registrant amended bridge loan agreements (“Bridge Loan Agreements”) with Essex
Woodlands Health Venture V, L.P., Care Capital Investments II, L.P., Care
Capital Offshore Investments II, L.P., Galen Partners III, L.P., Galen Partners
International III, L.P. and Galen Employee Fund III, L.P. (collectively, the
“VC
Lenders”) and certain individual lenders dated June 22, 2005, September 16,
2005, November 9, 2005 and January 31, 2006, under which the Registrant has
borrowed the principal amount of $5.635 million (inclusive of the August
16, 2006
bridge
loan described in Item 8.01 below) to extend the maturity date of such bridge
loans from September 1, 2006 to October 1, 2006. In addition, the amendments
to
the Bridge Loan Agreements provide that the lenders thereunder may rollover
all
or any portion of the principal and accrued interest outstanding under loans
made under such agreements into the Company’s first equity financing of at least
ten million dollars, subject to certain exceptions.
GCE
Holdings, LLC, which is controlled by the VC Lenders, beneficially owns
approximately 78% of the Registrant's outstanding common stock.
and has
the right to designate four directors (of which it has exercised the right
with
respect to three directors) to the Registrant’s Board of Directors.
Item
2.03 Creation
of a Direct Financial Obligation or an Obligation Under an Off Balance Sheet
Arrangement
The
contents of Items 1.01 and 8.01 are hereby incorporated by
reference.
Item
8.01 Other
Events
On
August
16, 2006,
the
Registrant borrowed $450,000 pursuant to a certain Bridge Loan Agreement dated
January 31, 2006 with various lenders. The Bridge Loan bears interest at a
rate
of 10% and matures on October 1, 2006. The Bridge Loan contains customary
default and acceleration provisions.
Item
9.01 Financial
Statements and Exhibits
| Exhibit Number | Description |
| 10.1 | Omnibus Amendment and Consent effective as of August 16, 2006 between the Registrant and various lenders. |
| 99.1 | Press Release dated August 16, 2006 Announcing Receipt of Bridge Funding and the Extension of the Maturity Date of Outstanding Bridge Loans |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
| ACURA PHARMACEUTICALS, INC. | ||
| |
|
|
| By: | /s/ Peter Clemens | |
|
Peter
A. Clemens
Senior
Vice President & Chief Financial Officer
|
||
| Date: August 16, 2006 | ||
Exhibit
Index
| Exhibit Number | Description |
| 10.1 | Omnibus Amendment and Consent effective as of August 16, 2006 between the Registrant and various lenders. |
| 99.1 | Press Release dated August 16, 2006 Announcing Receipt of Bridge Funding and the Extension of the Maturity Date of Outstanding Bridge Loans |
OMNIBUS
AMENDMENT AND CONSENT
OMNIBUS
AMENDMENT AND CONSENT EFFECTIVE AS OF August 16, 2006 (this “Omnibus
Amendment and Consent”)
by and
among Acura Pharmaceuticals, Inc. (the “Company”),
and
Acura Pharmaceutical Technologies, Inc. and the following lenders (“Lenders”):
Galen
Partners III, L.P. (as agent for the other lenders (“Agent”)
and as
a lender itself), Galen Partners International, III, L.P., Galen Employee Fund
III, L.P., Care Capital Offshore Investments II, LP, Care Capital Investments
II, LP, Essex Woodlands Health Ventures V, L.P., Dennis Adams, George E.
Boudreau, Michael Weisbrot, Susan Weisbrot; and the following persons with
respect to Sections 5, 6, 7, and 8: John E. Heppe Jr. and Peter Steiglitz
(“Additional
Watson Holders”).
Capitalized
terms used herein and not defined herein have the meanings set forth in the
Subordination Agreement dated as of January 31, 2006 among the Lenders, the
Company and others (the “Subordination
Agreement”).
R
E C I T A L S
WHEREAS
the
Company and one or more Lenders have entered into the June 2005 Loan Agreement,
the September 2005 Loan Agreement, the November 2005 Loan Agreement and the
January 2006 Loan Agreement (collectively, the “Loan
Agreements”)
and
such other agreements, notes and instruments executed in connection with such
loan agreements (collectively, the “Loan
Documents”);
and
WHEREAS,
the
Company and certain Lenders and the Additional Watson Holders are parties to
the
Watson Note (as defined in the Subordination Agreement); and
WHEREAS,
the
loans extended pursuant to the Loan Agreements are due to mature on September
1,
2006 (the “Original
Maturity Date”);
and
WHEREAS,
the
Company and the Lenders wish to (i) extend the Original Maturity Date and (ii)
provide the Lenders with a right to convert the principal and accrued and unpaid
interest under the Loan Documents into a Subsequent Material Offering (as
defined herein).
NOW,
THEREFORE,
in
consideration of the mutual covenants herein contained, the parties mutually
agree as follows:
AMENDMENT
AND CONSENT
| 1. |
Amendments:
|
|
(a)
|
Each
of the June 2005 Loan Agreement, the September 2005 Loan Agreement,
the
November 2005 Loan Agreement and the January 2006 Loan Agreement
is
amended by replacing “September 1, 2006” in Section 2.1 thereof with
“October 1, 2006” and by adding Section 5.12 as set forth in Exhibit
A.
|
|
(b)
|
Each
of the June 2005 Notes, the September 2005 Notes, the November 2005
Notes
and the January 2006 Notes (and each of the forms of such Notes attached
to the June 2005 Loan Agreement, the September 2005 Loan Agreement,
the
November 2005 Loan Agreement and the January 2006 Loan Agreement)
is
amended by:
|
(i)
replacing the words September 1, 2006, wherever they appear therein with
“October 1, 2006”; and
(ii)
appending the following additional section to such note:
References
to Loan Agreement.
References to the Loan Agreement in this Note shall mean references to the
Loan
Agreement, as amended, and as the same may be further amended, supplemented
or
modified from time to time.
| (c) |
In
the event a Replacement Note (as hereinafter defined) is issued pursuant
to Section 4 hereof, then in such Replacement Note the words “Secured
Promissory Note” shall be replaced with “Amended and Restated Promissory
Secured Note” and the following section shall be appended thereto:
|
Amended
and Restated Secured Promissory Note.
This Amended and Restated Secured Promissory Note issued by the Company in
favor
of the Payee amends and restates in its entirety, and is issued by the Company
in replacement of and substitution for a Secured Promissory Note of identical
principal amount issued to Payee pursuant to the Loan Agreement(the “Original
Note”). The Company and the Payee acknowledge and agree that upon the execution
delivery of this Amended and Restated Secured Promissory Note, the Original
Note
shall be null and void and of no further legal force or effect.
The
form
of such Replacement Note shall be also be attached to the applicable Loan
Agreement
as an acceptable form of note to be issued pursuant thereto.
2.
References
to Loan Documents:
Any
reference to any Loan Document in any other Loan Document shall mean the Loan
Document, as amended hereby.
3. Attachment
to All Notes:
The
Lenders covenant to give a copy of this Omnibus Amendment and Consent to any
purchaser of the June 2005 Notes, the September 2005 Notes, the November 2005
Notes or the January 2006 Notes prior to the actual purchase and to attach
a
copy of this Omnibus Amendment and Consent to any of such notes where the
undersigned is the named payee or holder.
4.
Amended
and Restated Notes.
Upon
request of the Company, each Lender agrees to deliver to the Company any of
the
June 2005 Notes, the September 2005 Notes, the November 2005 Notes or the
January 2006 Notes issued to them, in exchange for an amended and restated
Note
(the “Replacement
Note”)
incorporating the amendments set forth in this Omnibus Amendment and Consent.
5.
Subordination
Agreement. Each
Lender and Additional Watson Holder agrees to the provisions of this Omnibus
Amendment and Consent, including without limitation, to the amendments to the
June 2005, September 2005 Notes, the November 2005 Notes and the January 2006
Notes and acknowledges that the Subordination Agreement shall remain in full
force and effect .
6. Notes
and Agreements Not Assigned. The
undersigned Lenders and Additional Watson Holders acknowledge that they have
not
transferred, conveyed or assigned any of the Watson Note, the June 2005 Notes,
the September 2005 Notes, the November 2005 Notes or the January 2006 Notes
issued to them and the undersigned Lenders and Additional Watson Holders
acknowledge that they have not assigned any rights under the Loan Documents
or
under the Subordination Agreement.
7.
Counterparts:
This
Omnibus Amendment and Consent may be executed in one or more counterparts and
by
different parties hereto in separate counterparts, including by facsimile,
each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.
8. Governing
Law:
THIS
OMNIBUS AMENDMENT AND CONSENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
IN
WITNESS WHEREOF, each of the Parties have caused this Omnibus Amendment and
Consent to be duly executed and delivered as of the day and year first above
written.
| ACURA PHARMACEUTICALS, INC. | ||
| |
|
|
| By: | /s/ Peter A. Clemens | |
|
|
||
|
Name:
Title:
|
Peter
A. Clemens
Sr.
Vice President and CFO
|
|
| ACURA PHARMACEUTICAL TECHNOLOGIES , INC. | ||
| |
|
|
| By: | /s/ Peter A. Clemens | |
|
|
||
|
Name:
Title:
|
Peter
A. Clemens
Sr.
Vice President and CFO
|
|
|
LENDER
AND AGENT:
GALEN
PARTNERS III, L.P.
By:
Claudius, L.L.C., General Partner
610
Fifth Avenue, 5th
Fl.
New
York, New York 10019
/s/ Bruce
Wesson
By:
Bruce Wesson
Its:
General Partner
|
LENDER:
CARE
CAPITAL OFFSHORE INVESTMENTS II, LP
By:
Care Capital II, LLC, as general partner
47
Hulfish Street, Suite 310
Princeton,
NJ 08542
By:
/s/
David
Ramsay
By:
David R. Ramsay
Its:
Authorized Signatory
|
|
|
LENDER:
GALEN
PARTNERS INTERNATIONAL, III, L.P.
By:
Claudius, L.L.C., General Partner
610
Fifth Avenue, 5th
Floor
New
York, New York 10020
/s/ Bruce
Wesson
By:
Bruce Wesson
Its:
General Partner
|
LENDER:
CARE
CAPITAL INVESTMENTS II, LP
By:
Care Capital II, LLC, as general partner
47
Hulfish St., Suite 310
Princeton,
NJ 08542
By:
/s/
David
Ramsay
Name:
David R. Ramsay
Title:
Authorized Signatory
|
|
|
LENDER:
GALEN
EMPLOYEE FUND III, L.P.
By:
Wesson Enterprises, Inc.
610
Fifth Avenue, 5th
Floor
New
York, New York 10020
/s/ Bruce F.
Wesson
By:
Bruce F. Wesson
Its:
General Partner
|
LENDER:
ESSEX
WOODLANDS HEALTH
VENTURES
V, L.P.
190
South LaSalle Street, Suite 2800
Chicago,
IL 60603
/s/ Immanuel
Thangaraj
By:
Immanuel Thangaraj
Its:
Managing Director
|
|
|
LENDER:
MICHAEL
WEISBROT
1136
Rock Creek Road
Gladwyne,
Pennsylvania 19035
/s/ Michael
Weisbrot
|
LENDER:
SUSAN
WEISBROT
1136
Rock Creek Road
Gladwyne,
Pennsylvania 19035
/s/ Susan
Weisbrot
|
|
|
LENDER:
DENNIS
ADAMS
120
Kynlyn Road
Radnor,
Pennsylvania 19312
/s/ Dennis
Adams
|
LENDER:
GEORGE
E. BOUDREAU
222
Elbow Lane
Haverford,
PA 19041
/s/ George
Boudreau
|
|
|
ADDITIONAL
WATSON HOLDER:
PETER
STIEGLITZ
RJ
Palmer LLC
156
West 56th Street, 5th Floor
New
York, New York 10019
/s/ Peter
Stirglitz
|
ADDITIONAL
WATSON HOLDER:
JOHN
E. HEPPE, JR.
237
W. Montgomery Avenue
Haverford,
Pennsylvania 19041
/s/ John
Heppe
|
|
EXHIBIT
A
5.12. ROLLOVER
RIGHTS
Each
lender (a “Bridge Lender”) under any of the June 2005 Bridge Loan Agreement, the
September 2005 Bridge Loan Agreement, the November 2005 Bridge Loan Agreement
and the January 2006 Bridge Loan Agreement (each such term as defined in the
Subordination Agreement dated as of January 31, 2006 among the Company and
certain lenders (the “January
2006 Subordination Agreement”))
shall
have the one-time right (the “Rollover
Right”)
on the
terms provided below, to purchase through the conversion of all or any portion
of such Bridge Lender’s outstanding Bridge Loans (as defined below, including
principal and accrued and unpaid interest) any Common Stock or securities
convertible into Common Stock (collectively, “Common
Stock Equivalents”),
that
the Company may from time to time propose to sell and issue after the date
hereof in the first Subsequent Material Offering (as defined below) to occur
after the date hereof.
(a) If
the
Company proposes to issue and sell in one transaction or series of related
transactions to unaffiliated, third party investors (other than (i) issuances
of
options or restricted stock units to employees, consultants or directors, (ii)
interest on debt payable in common stock, (iii) pursuant to the conversion
of
warrants or other convertible securities outstanding on the date hereof, or
(iv)
sales or issuances of common stock to licensors in connection with bona fide
licensing deals), Common Stock and/or Common Stock Equivalents for aggregate
gross proceeds to the Company of at least $10,000,000 (inclusive of any
conversion of Bridge Loans pursuant to the Rollover Right) (a “Subsequent
Material Offering”),
the
Company shall give each Bridge Lender written notice (a “Subsequent
Material Offering Issue Notice”)
describing the type and amount of Common Stock and Common Stock Equivalents
proposed to be issued and the price and all the material terms upon which the
Company proposes to issue such Common Stock and Common Stock Equivalents,
specifying a proposed closing date and the principal amount of the Bridge
Lender’s outstanding Bridge Loans (and including copies of draft documents to
the extent they exist).
(b) Each
Bridge Lender may exercise its Rollover Right with respect to such Subsequent
Material Offering by written notice to the Company (which notice may specify
which Bridge Loans it wishes to rollover, and in the absence of such
specification, the Company will choose the Bridge Loans for rollover in order
of
issuance) given within 7 days after the Bridge Lender shall have received the
Subsequent Material Offering Issue Notice describing the Subsequent Material
Offering. If the material terms of the actual Subsequent Material Offering
differ from those specified in the Subsequent Material Offering Issue Notice,
each Bridge Lender shall be given the opportunity change the conversion election
they had made under the prior terms (including to elect to convert if they
previously did not do so).
(c) The
sale
of any Common Stock and Common Stock Equivalents to Bridge Lenders pursuant
to
this Section 5.12 shall be closed on the same terms, pursuant to the same
documents, at the same place as, and simultaneously with, the sale of any such
Common Stock and/or Common Stock Equivalents to any other purchasers in the
Subsequent Material Offering. At such closing the Bridge Lender shall surrender
notes being converted and the Company shall issue replacement notes to the
extent a note is converted in part.
(d) Notwithstanding
anything to the contrary contained herein, the Rollover Right provided in this
Section 5.12 shall apply solely to the first Subsequent Material Offering
occurring after the date hereof.
CONTACT:
Acura
Pharmaceuticals, Inc.,
Investor
Relations, Peter A. Clemens, SVP & CFO 847-705-7709
FOR
IMMEDIATE RELEASE
ACURA
PHARMACEUTICALS, INC. SECURES BRIDGE FUNDING
Palatine,
IL, August 16, 2006:
Acura
Pharmaceuticals, Inc. (OTC.BB-ACUR) today announced it has secured gross
proceeds of $450,000 under a term loan agreement (the “Loan”)
with Essex Woodlands Health Ventures V, L.P., Care Capital Investments II,
L.P.,
Care Capital Offshore Investments II, L.P., Galen Partners III, L.P., Galen
Partners International III, L.P. and Galen Employee Fund III, L.P (collectively
the “Bridge Lenders”). Coincident with this Loan, the Bridge Lenders have agreed
to change the maturity date on all previous bridge loans to October 1, 2006
from
September 1, 2006. The Loan bears an annual interest rate of 10%, is secured
by
a lien on all assets of the Company and its subsidiary, matures on October
1,
2006 and is senior to all other Company debt. The Loan permits the funding
of
additional cash amounts subject to agreement by the Company and the Bridge
Lenders. No assurance can be given, however, that any additional funding will
be
advanced to the Company under the terms of the Loan. In addition, the Company
has agreed that that the lenders under its bridge loan agreements may rollover
all or any portion of the principal and accrued interest outstanding under
loans
made under such agreements into the Company’s next equity financing of at least
ten million dollars, subject to certain exceptions.
Including
the Loan announced today, the Company has a total of $5.6 million in bridge
loans outstanding and due on October 1, 2006.
The
Company will utilize the net proceeds from the Loan to continue funding product
development and licensing activities relating to OxyADF™ tablets and other
product candidates utilizing its Aversion® Technology.
Cash
Reserves Update
The
Company estimates that its current cash reserves, including the net proceeds
from the Loan, will fund product development and licensing activities
through
mid-September, 2006.
To
continue operating thereafter, the Company must raise additional financing
or
enter into appropriate collaboration agreements with third parties providing
for
cash payments to the Company. No assurance can be given that the Company will
be
successful in obtaining any such financing or in securing collaborative
agreements with third parties on acceptable terms, if at all, or if secured,
that such financing or collaborative agreements will provide for payments to
the
Company sufficient to continue funding operations. In the absence of such
financing or third-party collaborative agreements, the Company will be required
to scale back or terminate operations and/or seek protection under applicable
bankruptcy laws.
About
Acura Pharmaceuticals, Inc.
Acura
Pharmaceuticals, Inc., together with its subsidiary, is a specialty
pharmaceutical company engaged in research, development and manufacture of
innovative abuse deterrent, abuse resistant and tamper resistant formulations
("Aversion® Technology") intended for use in orally administered
opioid-containing pharmaceutical products.
Forward
Looking Statements
This
press release contains "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. These statements are based on current
expectations of future events. If underlying assumptions prove inaccurate or
unknown risks or uncertainties materialize, actual results could vary materially
from the Company’s expectations and projections. The most significant of such
risks and uncertainties include, but are not limited to, the Company’s ability
to secure additional financing to fund continued product development and
operations, the Company’s ability to enter into contractual arrangements with
qualified pharmaceutical partners to license, develop and commercialize the
Company’s technology and product candidates, the Company’s ability to avoid
infringement of patents, trademarks and other proprietary rights or trade
secrets of third parties, and the Company’s ability to fulfill the FDA’s
requirements for approving the Company’s product candidates for commercial
distribution in the United States, including, without limitation, the adequacy
of the results of the clinical studies completed to date and the results of
other clinical studies, to support FDA approval of the Company’s product
candidates, the adequacy of the development program for the Company’s product
candidates, changes in regulatory requirements, adverse safety findings relating
to the Company’s product candidates, the risk that the FDA may not agree with
the Company’s analysis of its clinical studies and may evaluate the results of
these studies by different methods or conclude that the results of the studies
are not statistically significant, clinically meaningful or that there were
human errors in the conduct of the studies or otherwise, the risk that further
studies of the Company’s product candidates are not positive, and the
uncertainties inherent in scientific research, drug development, clinical trials
and the regulatory approval process. You are encouraged to review other
important risk factors relating to the Company on our web site at
www.acurapharm.com under the link, “Company Risk Factors” and detailed in
Company filings with the Securities and Exchange Commission. The Company is
at
development stage and may never have any products or technologies that generate
revenue. Acura Pharmaceuticals, Inc. assumes no obligation to update any
forward-looking statements as a result of new information or future events
or
developments. All Acura Pharmaceuticals, Inc. press releases may be reviewed
at
www.acurapharm.com.