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Struggling drug maker Altus Pharmaceuticals Inc., hampered by a weak financial position and ongoing high-level executive departures, has secured an option to pay $1.5 million for all of its preferred stock owned by Vertex Pharmaceuticals Inc.
The option, if exercised, would retire Vertex’s claims to some $2.3 million in accrued dividend payments as well as $4.5 million in potential payments owed by Altus. As it stands, the $4.5 million payment can be triggered either by Vertex, should it choose to redeem its preferred shares, or by Altus, should it ever be forced to liquidate.
A move to liquidate the company would give Vertex a substantial claim to Altus’ cash prior to any payments to common stockholders, per the terms of the companies’ preferred stock arrangement inked in 1999.
To exercise the option, Altus must enter into an agreement with a third party who agrees to indemnify Vertex “for any portion of the purchase price that Vertex might be required to divest in the case of a bankruptcy filing by Altus.”
In a recent regulatory filing, Altus said it would likely run out of cash by October if it is unable to secure a partnership or other financial deal to remain as a going concern. As of June 30 the company had $8.1 million in cash and cash equivalents on hand.
Altus (Nasdaq: ALTU) also said Monday that Jill Porter, vice president of process development and engineering, will resign effective Aug. 21.
In January, Altus canceled its program to develop Trizytek, a drug candidate eyed as a potential enzyme-replacement therapy for pancreatic deficiencies. The company cut 107 jobs in connection to the Trizytek shutdown and has since had a major reshuffling of its senior executive team.
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