Zyla Life Sciences (fka ZCOR)

[finesand]

Going Concern & Status Update

See links on the bottom, also updated Arymo Trx in intro.

Currently Arymo Er Trx shows $11.14M revenue on full coverage, Trx is rising of course.
Full insurance coverage not reached yet, but they are making progress with last insurance additions.

From 3/23 PR
- 2/28 "one of the largest Northeast regional health plans with 24 million members has placed Arymo ER and Sprix Nasal Spray in preferred formulary positions."
- 11/6 "a large payer will provide coverage of Arymo ER for its 1.4 million Medicare Part D members."

Last DD parts re Going Concern Dilemma

EGLT is on the hard path from developing to commercial biotech.
On 3/12 ER CC 8:30am, CFO Musial explicitly stated the Going Concern opinion, as filed in the 10-K on 3/16.
This didn't concern shareholders until 3/22, where it got reported by the WSJ and Philadelphia Business Journal.
Surely most buyers since have listened to or read the CC (transcript) and for sure read the 10-K,
nobody was really concerned knowing the increased revenue, growth and progress.

3/12 ER CC 8:30am

Steve Musial, CFO:

Taken into account our current operating plan, including net revenue, operating expense, and debt service, and assuming that our stock remains listed on NASDAQ, we estimate that our year-end cash position will be sufficient to fund the company into 2020. However, our audited financial statements for the year ended December 31, 2017 will contain a going concern opinion because of the possibility of debt becoming due in the scenario where we are unable to maintain listing on NASDAQ.

3/16 10-K 4Q17 p28 Going Concern Language

Now the debt swap itself has fixed the MCAP listing issue and the $1 SP either will be reached towards end of '18 the latest or RS EOY.
Reminder, lender were willing to convert at $1.329/sh
Excessive crash here due to above PR but foremost due to market crash IMO

Debt Swap Covenants

EGLT's new 2024 bonds are already registered EGLT4584286, concluding the old 2020 bonds EGLT4352513.

10-K page F-28 .. F-29 regarding the debt swap
They couldn't get the conversion done in Dec '17, vote approved AS increase in February 2018
-> hence the listing warning, $50M MCAP, debt covenant
-> going concern
So all this is more regulatory, still a little crisis ofc.
Since the new bonds are already up, they may file conversion results soon - which would be a big relieve -> SP up

3/23 PR With Company's Statement Regarding Going Concern
- Musial said a reverse stock split would be a “last resort” option.
- needs to hit $1.08 per share. “It’s not that far a reach to get their naturally,” Musial said.
- Some [debt holders] have been very supportive and we believe there is an opportunity to address [the redemption issue] with some of them to get out from under the requirement.”
- In December, the company entered into an agreement with certain debt holders to refinance existing convertible notes. (see above)
- The company ended the year with $91 million in cash, cash equivalents and short-term investments, which Egalet said would enable it to fund cash requirements into 2020.

Also on 3/23, Trump's Omnibus Deal
- $6B for opioids crisis signed: "stop the pain w/o the addiction" (Trump)
- First only $2.8B was suggested
- Some of that shall stick to insurance coverage, supporting AD drugs

Catalysts / Status
- Arymo ER Sales Increase
- Completion of Debt Swap @ around $1.33/sh, fixing $50M mcap listing deficiency, removes going concern note
- Removal of the Debt Covenant triggered the going concern note (PR 3/23)
- $6B opioid crisis budget omnibus bill signed 3/23 instead of $2.8B
- $1 SP Listing Extension if required, RS as last resort (PR 3/23)
- 002 and Guardian Partnership / Sales
- Extended Arymo ER Label in Oct '18
- Lawsuit Settlement (Arymo ER Extended Label Dispute)

+++

11/6 Coverage-1 https://www.prnewswire.com/news-releases/egalet-announces-arymo-er-added-to-large-payer-medicare-part-d-formulary-300549661.html
2/28 Coverage-2 https://www.prnewswire.com/news-releases/egalet-announces-a-large-regional-health-plan-placed-arymo-er-and-sprix-nasal-spray-in-preferred-formulary-positions-300605477.html

12/15 Extended Label https://www.prnewswire.com/news-releases/egalet-receives-fda-tentative-approval-for-expanded-label-for-arymo-er-morphine-sulfate-c-ii-an-extended-release-morphine-product-formulated-with-abuse-deterrent-properties-for-treatment-of-chronic-pain-300571807.html

12/20 Debt Swap https://www.prnewswire.com/news-releases/egalet-reduces-debt-obligation-extends-maturity-and-lowers-annual-interest-payments-through-refinancing-of-existing-convertible-notes-300573695.html

3/12 ER CC 8:30am https://seekingalpha.com/article/4155574-egalets-eglt-ceo-robert-radie-q4-2017-results-earnings-call-transcript?part=single
3/16 10-K https://www.sec.gov/Archives/edgar/data/1586105/000155837018002180/eglt-20171231x10k.htm

3/22 PR-1 Going Concern https://www.bizjournals.com/philadelphia/news/2018/03/22/auditor-raises-questions-about-egalets-future.html
3/22 PR-2 Going Concern https://www.wsj.com/articles/drug-maker-egalet-raises-going-concern-warning-1521742916
3/23 PR-3 Going Concern https://www.bizjournals.com/philadelphia/news/2018/03/23/egalet-ceo-we-are-moving-the-company-closer-and.html

2024 Bonds http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C730269&symbol=EGLT4584286
2020 Bonds http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?symbol=EGLT4352513&ticker=C650855