Pernix appointed Doug Drysdale as its CEO. Pernix also announced that a group of institutional investors led by Athyrium Capital Management have agreed to purchase $65 million aggregate principal amount of 8.00% convertible senior notes due 2019 from the company. The notes are convertible into shares of common stock of Pernix at an initial conversion price of $3.60 per share. The appointment of Drysdale was supported by the group of institutional investors led by Athyrium Capital Management.
Pernix expects to use the capital provided from the buyout of notes for strategic acquisitions along with working capital and for general corporate purposes.
Separately, Pernix also announced that it has settled all its pending claims brought against by the former shareholders of erstwhile Cypress Pharmaceuticals, Inc. related to the acquisition.
We remind investors that Pernix has completed the acquisition of Cypress Pharma (a privately-owned generic pharmaceutical company) at the end of Dec 2012.
As per the settlement agreement, Pernix is required to pay $1.3 million to the former shareholders of Cypress Pharma on or before Feb 7, 2014. The amount was accrued as a contingent consideration by Pernix. The settlement also modified some other terms of the acquisition to enable better product development flexibility.
Additionally, Pernix also reached an agreement with the Attorney General of the State of Texas. The company settled all claims arising from certain actions by Cypress prior to the acquisition.
The resolution of the pending litigation matters and appointment of a new CEO is encouraging. We expect further details on the same when the company reports fourth quarter results.
Pernix currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in its sector include Actavis, Inc. (ACT ), Actelion Ltd. (ALIOF) and Biogen Idec Inc (BIIB). All three carry a Zacks Rank #1 (Strong Buy).