Item 2.02 Results of Operations and Financial Condition.
On May 15, 2020, Zyla Life Sciences (the "Company") issued a press release
("Press Release") announcing its financial results for its first quarter ended
March 31, 2020. A copy of that press release and the attached financial
schedules are attached as Exhibit 99.1 to this report and incorporated herein by
reference.
The information included in this Item 2.02 (including Exhibit 99.1) is being
furnished pursuant to Item 2.02 and shall not be deemed to be "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange
Act") or otherwise subject to the liabilities of that Section, nor shall it be
deemed to be incorporated by reference in any filing under the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act.
Item 8.01 - Other Events
The Press Release contained information relating to the proposed transaction
(the "Merger") between the Company and Assertio Therapeutics, Inc., a Delaware
corporation ("Assertio"), pursuant to the terms of an Agreement and Plan of
Merger, dated as of March 16, 2020, by and among the Company, Assertio, Assertio
Holdings, Inc., Zebra Merger Sub, Inc. and Alligator Merger Sub, Inc. The
relevant portions of the Press Release that relate to the Merger are set forth
below.
[****] said Todd Smith, president, chief executive officer (CEO) and director of
Zyla. "Even in this turbulent time, we believe we have the commercial foundation
needed to continue growing our portfolio. We look forward to moving toward the
close of the proposed merger with Assertio and a promising future."
Recent and First Quarter Highlights
• Announced merger with Assertio Therapeutics on March 16, 2020, with combined
company pro-forma 2019 revenue of approximately $128 million and combined
synergy potential of upwards of $40 million allowing for anticipated pro-forma
2020 non-GAAP adjusted EBITDA margins greater than 25% and net leverage of less
than two times.
Note Regarding Use of Non-GAAP Financial Measures
Zyla provides non-GAAP adjusted EBITDA margin, or earnings before interest,
taxes, depreciation and amortization margin, as a financial measure. Zyla
believes that this non-GAAP financial measure, when considered together with the
GAAP figures, can enhance an overall understanding of Zyla's financial
performance and the financial performance of the proposed combined company. The
non-GAAP financial measure is included with the intent of providing investors
with a more complete understanding of operational results and trends. In
addition, this non-GAAP financial measure is among the indicators Zyla's
management uses for planning and forecasting purposes and measuring their
respective company's performance and which the combined company expects to use
to measure the combined company's performance. It should be considered in
addition to, and not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP. This non-GAAP financial measure may be
calculated differently from, and therefore may not be comparable to, non-GAAP
financial measures used by other companies.
Proposed Merger
On March 16, 2020 Assertio Therapeutics and Zyla announced that they entered
into a definitive merger agreement. The boards of directors of both companies
have approved the Merger and the Agreement. The Merger is currently expected to
close in the second quarter of 2020, subject to approval by Assertio
stockholders and by Zyla stockholders, and the satisfaction of other customary
closing conditions. Additional details can be found in Assertio's and Zyla's
respective Current Reports of Form 8-K filed with the Securities and Exchange
Commission on March 17, 2020.
Safe Harbor
Statements included in this press release that are not historical in nature and
contain the words "anticipate," "believe," "estimate," "expect," "intend,"
"may," "plan," "predict," "project," "suggest," "target," "potential," "will,"
"would," "could," "should," "continue," "look forward to" and other similar
expressions are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
based on management's current expectations and are subject to known and unknown
uncertainties and risks. Actual results could differ materially from those
discussed due to a number of factors, including, but not limited to: our ability
to continue as a going concern; the impact of our bankruptcy on our business
going forward, including with regard to relationships with vendors and customers
and the costs and expenses resulting from our bankruptcy; the impact of our
acquisition of five products from Iroko Pharmaceuticals, Inc., including our
assumption of related liabilities, potential exposure to successor liability and
credit risk of Iroko and its affiliates; our estimates regarding expenses,
future revenues, capital requirements and needs for additional financing; our
current and future indebtedness; our ability to maintain compliance with the
covenants in our debt documents; the level of commercial success of our
products; coverage of our products by payors and pharmacy benefit managers; our
ability to execute on our sales and marketing strategy, including developing
relationships with customers, physicians, payors and other constituencies; the
rate and degree of market acceptance of any of our products; the success of
competing products that are or become available; the entry of any generic
products for any of our products; recently enacted and future legislation and
regulations regarding the healthcare system; the accuracy of our estimates of
the size and characteristics of the potential markets for our products and our
ability to serve those markets; our failure to recruit or retain key personnel,
including our executive officers; obtaining and maintaining intellectual
property protection for our products; our ability to operate our business
without infringing the intellectual property rights of others; our ability to
integrate and grow any businesses or products that we may acquire; the outcome
of any litigation in which we are or may be involved; the risk that the
conditions to the closing of the proposed merger with Assertio (the "Merger")
are not satisfied, including the risk that required stockholder approvals for
the proposed Merger are not obtained; the occurrence of any event, change or
other circumstances that either could give rise to the right to terminate the
Agreement; the risk of litigation relating to the proposed Merger; uncertainties
as to the timing of the consummation of the proposed transaction and the ability
of each party to consummate the proposed Merger; risks related to disruption of
management time from ongoing business operations due to the proposed Merger;
unexpected costs, charges or expenses resulting from the proposed Merger;
competitive responses to the proposed Merger and the impact of competitive
services; certain restrictions during the pendency of the Merger that may impact
our ability to pursue certain business opportunities or strategic transaction;
potential adverse changes to business relationships resulting from the
announcement or completion of the Merger; the combined company's ability to
achieve the growth prospects and synergies expected from the Merger, as well as
delays, challenges and expenses associated with integrating the combined
company's existing businesses; negative effects of this announcement or the
consummation of the proposed Merger on the market price our common stock, credit
ratings and operating results; legislative, regulatory and economic
developments, including changing business conditions in the industries in which
we operate; the impact of disasters, acts of terrorism or global pandemics;
general market conditions; and other risk factors set forth in Zyla's Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the United
States Securities and Exchange Commission (SEC) and in other filings Zyla makes
with the SEC from time to time. While Zyla may elect to update these
forward-looking statements at some point in the future, it specifically
disclaims any obligation to update or revise any forward-looking-statements
contained in this press release whether as a result of new information or future
events, except as may be required by law.
No Offer or Solicitation
This communication relates to a proposed business combination involving Assertio
and Zyla. The information in this communication is for informational purposes
only and is neither an offer to purchase, nor a solicitation of an offer to
sell, subscribe for or buy any securities or the solicitation of any vote in any
jurisdiction pursuant to the proposed transactions or otherwise, nor shall there
be any sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the Securities
Act.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the
proposed Merger. The proposed Merger will be submitted to Assertio's
stockholders and Zyla's stockholders for their consideration. In connection with
the proposed Merger, Assertio and Zyla filed a joint proxy statement (the "Joint
Proxy Statement") in connection with the solicitation of proxies by Assertio and
Zyla in connection with the proposed Merger. Assertio filed a registration
statement on Form S-4 (the "Form S-4") with the SEC, in which the Joint Proxy
Statement was included as a prospectus. Assertio and Zyla also intend to file
other relevant documents with the SEC regarding the proposed Merger. The
definitive Joint Proxy Statement was mailed to Assertio's stockholders and
Zyla's stockholders. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH
RESPECT TO THE PROPOSED MERGER, INVESTORS AND STOCKHOLDERS OF ASSERTIO AND
INVESTORS AND STOCKHOLDERS OF ZYLA ARE URGED TO READ THE DEFINITIVE REGISTRATION
STATEMENT, INCLUDING THE JOINT PROXY STATEMENT, REGARDING THE PROPOSED MERGER
(INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND OTHER RELEVANT MATERIALS
WHEN THEY BECOME AVAILABLE CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.
The Joint Proxy Statement, any amendments or supplements thereto and other
relevant materials, and any other documents filed by Assertio or Zyla with the
SEC, may be obtained once such documents are filed with the SEC free of charge
at the SEC's website at www.sec.gov or free of charge from Assertio at
www.assertiotx.com or by directing a request to Assertio's Investor Relations
Department at investor@assertiotx.com or from Zyla at www.zyla.com or by
directing a request to Zyla's Investor Relations Department at ir@zyla.com.
Participants in the Solicitation
Assertio, Zyla and certain of their respective executive officers, directors,
other members of management and employees may, under the rules of the SEC, be
deemed to be "participants" in the solicitation of proxies in connection with
the proposed Merger. Information regarding Assertio's directors and executive
officers is available in its Proxy Statement on Schedule 14A for its 2020 Annual
Meeting of Stockholders, that was filed with the SEC on April 8, 2020 and in its
Annual Report on Form 10-K for the year ended December 31, 2019, that was filed
with the SEC on March 10, 2020. Information regarding Zyla's directors and
executive officers is available in its form 10-K/A, that was filed with the SEC
on April 27, 2020 and in its Annual Report on Form 10-K for the year ended
December 31, 2019, that was filed with the SEC on March 26, 2020. These
documents may be obtained free of charge from the sources indicated above. Other
information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or
otherwise, are contained in the Joint Proxy Statement and other relevant
materials relating to the proposed Merger filed with the SEC.
Item 9.01 - Financial Statements and Exhibits
(d) Exhibits
Exhibit Number Description
99.1 Press Release, dated May 15, 2020, announcing financial results
for the quarter ended March 31, 2020.
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