Human Genome Sciences Announces Offering of Convertible Notes
ROCKVILLE, Md.--(BUSINESS WIRE)--Human Genome Sciences, Inc. (Nasdaq: HGSI) today announced its intention to offer, subject to market and other conditions, $400 million aggregate principal amount of its Convertible Senior Notes due 2018. The notes will be convertible, under certain circumstances, into cash, shares of the company’s common stock, or a combination, at the company’s election. The interest rate, conversion price and certain other terms of the offering are to be determined at the time of pricing. The company intends to grant the underwriter an option to purchase up to an additional $60 million aggregate principal amount of notes.
In connection with the offering, the company intends to enter into capped call transactions with certain counterparties which may include affiliates of the underwriter in the offering (the “counterparties”). The capped call transactions are intended to reduce the potential dilution to the company’s common stock and/or offset any potential cash payments in excess of the principal amount of the converted notes, as the case may be, in connection with conversion of the notes, up to the initial cap (which is expected to be set at a price equal to approximately 180% of the last reported sale price of the company’s common stock on November 1, 2011).
The company intends to use the net proceeds from this offering for general corporate purposes, which may include repurchases of the company’s outstanding 2¼% Convertible Subordinated Notes due 2012 before their scheduled maturity date on August 15, 2012, or repayment of the 2012 Notes at maturity, unless they are converted into the company’s common stock. In addition, the company intends to use a portion of the net proceeds of the offering to fund the cost of the capped call transactions with the counterparties. If the underwriter exercises its option to purchase additional notes, the company may use a portion of the net proceeds from the sale of such additional notes to fund the additional cost of entering into additional capped call transactions with the counterparties.
Citigroup is acting as the underwriter in the offering. The notes are being offered pursuant to an effective shelf registration statement that was previously filed with the Securities and Exchange Commission and became effective immediately upon filing on October 29, 2009. An electronic copy of the preliminary prospectus supplement and related base prospectus may be obtained by contacting: Citigroup Global Markets Inc. at Brooklyn Army Terminal, 140 58th Street, 8th Floor, Brooklyn, NY 11220, telephone number (800) 831-9146 or email at batprospectusdept@citi.com. An electronic copy of the preliminary prospectus supplement and related base prospectus may also be obtained at no charge at the Securities and Exchange Commission’s website at www.sec.gov.
This news release does not constitute an offer to sell or a solicitation of an offer to buy the notes described herein, nor shall there be any sale of these notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the laws of such jurisdiction. The offering of the notes will be made only by means of a prospectus supplement and related base prospectus.
About Human Genome Sciences
Human Genome Sciences exists to place new therapies into the hands of those battling serious disease.
HGS, Human Genome Sciences and BENLYSTA® are trademarks of Human Genome Sciences, Inc.
Safe Harbor Statement
This announcement includes statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include those expectations regarding the offering of notes and our use of net proceeds. These forward-looking statements are based on our current intentions, beliefs and expectations regarding future events. We cannot guarantee that any forward-looking statement will be accurate. Investors should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from our expectations. Investors are, therefore, cautioned not to place undue reliance on any forward-looking statement. Any forward-looking statement speaks only as of the date of this announcement, and, except as required by law, we do not undertake to update any forward-looking statement to reflect new information, events or circumstances.
Some important factors that could cause our actual results to differ from our expectations in these forward-looking statements include: our lack of commercial experience and dependence on the sales growth of BENLYSTA; any failure to commercialize BENLYSTA successfully; the occurrence of adverse safety events with our products; changes in the availability of reimbursement for BENLYSTA; the inherent uncertainty of the timing, success of, and expense associated with, research, development, regulatory approval and commercialization of our pipeline products and new indications for existing products; substantial competition in our industry, including from branded and generic products; the highly regulated nature of our business; uncertainty regarding our intellectual property rights and those of others; the ability to manufacture at appropriate scale, and in compliance with regulatory requirements, to meet market demand for our products; our substantial indebtedness and lease obligations; our dependence on collaborations over which we may not always have full control; foreign exchange rate valuations and fluctuations; the impact of our acquisitions and strategic transactions; changes in the health care industry in the U.S. and other countries, including government laws and regulations relating to sales and promotion, reimbursement and pricing generally; significant litigation adverse to the company, including product liability and patent infringement claims; our ability to attract and retain key personnel; and increased scrutiny of the health care industry by government agencies and state attorneys general resulting in investigations and prosecutions.
The foregoing list sets forth many, but not all, of the factors that could cause actual results to differ from our expectations in any forward-looking statement. Investors should consider this cautionary statement, as well as the risk factors identified in our periodic reports filed with the SEC and the prospectus supplement and related base prospectus, when evaluating our forward-looking statements.