Despite its efforts to resolve its financial challenges, Impel Pharmaceuticals remains at risk of bankruptcy and is launching a last-ditch attempt to save itself by exploring strategic alternatives, including a potential sale or merger.
The Seattle-based company is actively seeking options to secure a sale of assets, sell the company, or pursue a merger, with a target to complete a transaction by early 2024 at the latest. If Impel cannot successfully execute a transaction, it may need to seek additional financing or consider other alternatives for restructuring and addressing its significant liabilities.
To understand Impel’s current predicament, we need to look back to 2021 when the company went public to raise funds for the launch of its intranasal migraine drug, Trudhesa. While the drug received FDA approval later that year, it did not meet its commercial targets. Impel had anticipated selling 70,000 to 85,000 prescriptions in 2022 but fell short, closing the year with a total of 58,400 prescriptions.
In response to these challenges, the company made substantial cutbacks, including discontinuing pipeline programs and reducing its workforce by 16% in February of the current year. Additionally, Chief Medical Officer Stephen Shrewsbury, M.D., departed from the company.
Impel encountered further difficulties with its lender, Oaktree Fund Administration, after failing to submit a quarterly financial report, which was a requirement under the terms of its credit agreement. This agreement mandated that Impel could not be labeled a “going concern” and must maintain at least $12.5 million in unrestricted cash. Impel breached the first clause in its 2022 annual report but received a waiver from the lender.
Subsequently, Impel breached the second clause of the agreement. The company had previously warned investors of this risk but indicated plans to address it in the second quarter through equity financings, collaborations, or other strategic transactions. Unfortunately, these efforts did not yield the expected results.
Through August, Impel continued to seek additional funding, with a plan to explore strategic alternatives to maximize stakeholder value if a successful deal did not materialize, including asset sales or bankruptcy.
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While Impel has now reached the point of pursuing alternatives, it managed to amend its credit agreement with Oaktree, averting potential bankruptcy. This revised agreement allowed Impel to access an additional $2.5 million in tranche B term loans and offers the possibility to draw up to $10 million more in tranche B term loans by the end of 2023 based on specific milestones and conditions.
The amended agreement also mandates Impel to make every effort to secure equity financing before October 31, 2023. If potential proceeds exceed $5 million, half of these funds must be allocated to loan repayment.
In addition to its financial concerns, Impel faces potential delisting from Nasdaq. The company received a notice from Nasdaq on September 28, indicating non-compliance with the minimum bid price requirement of $1 per share for 30 consecutive days. Impel has until March 26, 2024, to regain compliance to avoid delisting.