Kadmon Announces Closing of $240 Million Convertible Senior Notes Offering Including Full Exercise of $40 Million Over-Allotment Option

NEW YORK, NY / ACCESSWIRE / February 16, 2021 / Kadmon Holdings, Inc. (Nasdaq:KDMN) today announced the closing of $240 million aggregate principal amount of 3.625% convertible senior notes due 2027 (the "Notes") in a private, overnight offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, which includes the full exercise of the $40 million over-allotment option. The initial conversion price of the Notes is equivalent to $6.96 per share, a premium of approximately 30% over the $5.35 per share closing price of Kadmon's common stock on February 10, 2021. Kadmon entered into capped call transactions to raise the conversion price to $10.70 per share, a premium of 100% over the $5.35 per share closing price of Kadmon's common stock.

By increasing the effective conversion premium of Kadmon's common stock from 30% to 100% (from $6.96 per share to $10.70 per share), these capped call transactions are expected to reduce the potential dilutive effect on Kadmon's common stock upon conversion of the Notes or at Kadmon's election (subject to certain conditions) to offset any cash payments Kadmon is required to make in excess of the aggregate principal amount of converted Notes, with such reduction and/or offset subject to a cap. This offering was upsized from the previously announced offering of $150 million of aggregate principal amount of Notes.

Kadmon estimates that the net proceeds from the offering are approximately $232.8 million after deducting the initial purchasers' discounts and estimated offering expenses payable by Kadmon.

Kadmon intends to use a portion of the proceeds to prepare to commercialize belumosudil for chronic graft-versus-host disease in the United States, if approved; for the development of its other clinical-stage product candidates; for the discovery, research and preclinical studies of its other product candidates; and for other general corporate purposes. Kadmon intends to use the balance of the net proceeds from the offering to fund the cost of entering into the capped call transactions described below.

The Notes will mature on February 15, 2027, unless earlier converted, redeemed or repurchased, and are convertible, subject to the satisfaction of certain conditions, into cash, shares of Kadmon's common stock or a combination thereof as elected by Kadmon in its sole discretion. The Notes are general unsecured obligations of Kadmon and interest will be payable semi-annually in arrears. Kadmon will have the right to redeem the Notes, in whole or in part, and from time to time, on or after February 20, 2024, subject to certain conditions, at a cash redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The initial conversion rate of the Notes is 143.7815 shares of Kadmon's common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $6.96 per share). The initial conversion price of the Notes represents a premium of approximately 30% over the $5.35 closing price of Kadmon's common stock on the Nasdaq Global Select Market on February 10, 2021. The conversion rate and conversion price are subject to adjustment upon the occurrence of certain events.

In connection with the pricing of the Notes, Kadmon entered into capped call transactions with certain financial institutions (the "option counterparties"). The capped call transactions cover, subject to customary adjustments, the number of shares of common stock initially underlying the Notes. The capped call transactions are expected to generally reduce the potential dilutive effect on Kadmon's common stock upon conversion of the Notes or at Kadmon's election (subject to certain conditions) to offset any cash payments Kadmon is required to make in excess of the aggregate principal amount of converted Notes, with such reduction and/or offset subject to a cap. The cap price of the capped call transactions relating to the Notes is $10.70 per share, which represents a premium of 100% over the $5.35 closing price of Kadmon's common stock on the Nasdaq Global Select Market on February 10, 2021, and is subject to certain adjustments under the terms of the capped call transactions.

Cantor Fitzgerald & Co. acted as sole book runner for the offering. Mizuho Securities acted as lead manager and H.C. Wainwright & Co., Oppenheimer & Co. and Raymond James acted as co-managers for the offering.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities of Kadmon. Any offers of the Notes will be made only by means of a private offering memorandum. The offer and sale of the Notes and any shares of Kadmon's common stock issuable upon conversion of the Notes have not been, and will not be, registered under the Securities Act or the securities laws of any other jurisdiction, and the Notes and such shares may not be offered or sold in the United States absent registration or an applicable exemption from the Securities Act and applicable state laws.

About Kadmon

Kadmon is a clinical-stage biopharmaceutical company that discovers, develops and delivers transformative therapies for unmet medical needs. Kadmon's clinical pipeline includes treatments for immune and fibrotic diseases as well as immuno-oncology therapies.

Forward Looking Statements

This press release contains forward-looking statements. Such statements may be preceded by the words "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. These forward-looking statements include, without limitation, statements regarding the intended use of the proceeds and the anticipated effects of entering into the capped call transactions described above. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Among those risks and uncertainties are risks related to market conditions, including market interest rates, and the trading price and volatility of Kadmon's common stock. We believe that these factors also include, but are not limited to, (i) the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs; (ii) our ability to advance product candidates into, and successfully complete, clinical trials; (iii) the impact of the COVID-19 pandemic on our business, workforce, patients, collaborators and suppliers, including delays in anticipated timelines and milestones of our clinical trials and on various government agencies who we interact with and/or are governed by; (iv) our reliance on the success of our product candidates; (v) the timing or likelihood of regulatory filings and approvals, including the acceptance of our NDA for belumosudil, especially in light of the COVID-19 pandemic; (vi) our ability to expand our sales and marketing capabilities; (vii) our ability to expand our sales and marketing capabilities; (viii) the commercialization, pricing and reimbursement of our product candidates, if approved; (ix) the implementation of our business model, strategic plans for our business, product candidates and technology; (x) the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology; (xi) our ability to operate our business without infringing the intellectual property rights and proprietary technology of third parties; (xii) costs associated with defending intellectual property infringement, product liability and other claims; (xiii) regulatory developments in the United States, Europe, and other jurisdictions; (xiv) estimates of our expenses, future revenues, capital requirements and our needs for additional financing; (xv) the potential benefits of strategic collaboration agreements and our ability to enter into strategic arrangements; (xvi) our ability to maintain and establish collaborations; (xvii) the rate and degree of market acceptance of our product candidates, if approved; (xviii) developments relating to our competitors and our industry, including competing therapies; (xix) our ability to effectively manage our anticipated growth; (xx) our ability to attract and retain qualified employees and key personnel; (xxi) our expected use of cash and cash equivalents and other sources of liquidity; (xxii) the potential benefits of any of our product candidates being granted orphan drug designation; (xxiii) the future trading price of the shares of our common stock and impact of securities analysts' reports on these prices; (xxiv) our ability to apply unused federal and state net operating loss carryforwards against future taxable income and/or (xv) other risks and uncertainties. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"), including Kadmon's Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Investors and security holders are urged to read these documents free of charge on the SEC's website at www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

Contact Information:

Ellen Cavaleri, Investor Relations
646.490.2989
ellen.cavaleri@kadmon.com

SOURCE: Kadmon Holdings, Inc.



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