The pivotal clinical trial of biosimilar insulin glargine demonstrated results, in line with prior expectations. The company is co-developing this product with its strategic alliance partners within the HEC Group of companies. The single center, single-dose, double-blind, randomized, two-period, two-treatment, two-sequence, crossover study was designed to demonstrate pharmacokinetic and pharmacodynamic similarity between Lannett/HECs biosimilar insulin glargine and US-Lantus using the euglycemic clamp technique in healthy male adult volunteers. The study met all of its primary and secondary endpoints and no serious adverse events were reported. The data from the pivotal trial of the Company’s biosimilar insulin glargine indicate that its insulin glargine is biosimilar to the reference product. Lannett is moving forward expeditiously to complete the Biologics License Application, with the goal of submitting the application to the FDA within the next several months. Prior to filing, there are additional meaningful activities to complete, including a device differentiation study, which will run in April, and more comparability work showing HEC’s insulin glargine is biosimilar to US sourced Lantus. Lannett also anticipates engaging with the FDA in a pre-submission meeting. There are significant steps necessary for the company to receive FDA approval to effectively commercialize this product, and there is no guarantee that the company will be successful in this regard. The company continues to assess the potential impacts of recent developments in the insulin market, including announcements by manufacturers related to lowering the price of insulin for patients, especially list prices, and enhancing market transparency. Lannett welcomes these initiatives to help drive greater access to this critical medicine and believes these changes dovetail with the Company’s promising go-to-market approach. As a result of continued competitive pressures on the company’s current portfolio and to evaluate options to establish a sustainable capital structure ahead of the launch, subject to approval, of new products, including the company’s biosimilar insulin glargine product, the company is in discussions with key secured creditors regarding a potential recapitalization or restructuring of its capital structure. While the company cannot provide any assurance as to if or when it will consummate any such transactions or the terms of any such transactions, the company expects to be able to reach an agreement with its key secured creditors in the near term on such a transaction. Any such potential transaction may involve the restructuring of all or a material portion of the company’s outstanding debt, including the exchange of all or a material portion of the secured debt for new common stock or other equity. Holders of the company’s common stock and convertible notes may not receive any value or payments in a recapitalization, restructuring or similar transaction and/or may experience material dilution or the loss or cancellation of their investment. The terms of any transaction will depend on prevailing market conditions, the company’s liquidity requirements and cash position, contractual restrictions, trading prices of debt from time to time and other factors. As such, the company elected to defer an interest payment on certain of the company’s unsecured convertible notes and enter a 30-day grace period. The Company’s election to not make the interest payment was not driven by liquidity constraints as the Company has approximately $47M of unrestricted cash as of March 31. If the company does not make this interest payment within the 30-day grace period, it will constitute an event of default under the indenture governing the convertible notes. If an event of default occurs, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding convertible notes may declare 100% of the principal of, and accrued and unpaid interest on, all the convertible notes to be due and payable immediately.
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