The Santa Clara, California-based calcified cardiovascular disease treatment developer announced its private offering yesterday, Aug. 10. That announcement covered convertible senior notes due in 2028. It featured an additional option to purchase, within 13 days of first issuance, up to an additional $75 million in notes.
Shockwave today updated the details of its offering to include a 1% interest rate per year. The 13-day option now extends to up to an additional $100 million. According to a news release, the company expects the offering to close on Aug. 15.
The notes — senior, unsecured obligations of Shockwave Medical — are payable semi-annually in arrears on Feb. 15 and Aug. 15 of each year. That begins on Feb. 15, 2024. The notes mature on Aug. 15, 2028, unless earlier converted, repurchased or redeemed in accordance with their terms.
Shockwave expects net proceeds to total approximately $632.9 million, or $730.4 million if the purchaser exercises the additional option.
Shockwave Medical sheds more light on the use of proceeds
The company’s initial announcement included few details on the intended use of the offering’s proceeds. Shockwave said it plans to use a portion of proceeds to pay the cost of capped call transactions related to the offering. If an initial purchaser exercises the option to purchase additional notes, Shockwave intends to use a portion of those proceeds for capped call transactions.
For the remainder, Shockwave intends to use the proceeds for general corporate purposes. That may include sales and marketing, medical affairs, educational efforts, R&D, clinical studies and working capital. It could also go toward investments in and acquisitions of other companies, products or technologies. Shockwave said it currently has no commitments or specific plans on that front, though.
In today’s announcement, Shockwave said it plans to use approximately $83.5 million to pay the cost of those capped call transactions. The same plan to cover capped call transactions goes for the additional funds brought in from additional notes. Shockwave reiterated its plans for the remainder to go toward general corporate purposes, which could include those investments and acquisitions.
More details on the capped call transactions
In connection with the pricing, Shockwave entered into privately negotiated capped call transactions with the initial purchaser. These cover the number of shares of the company’s common stock that initially underlie the notes.
The company said it expects the transactions to generally reduce the potential dilution to its common stock upon note conversion. It may also offset any cash payments Shockwave is required to make in excess of the principal amount of any converted notes.
Such reduction and/or offset subject to a cap would equal $444.70, representing a 100% premium on Shockwave’s closing price on Aug. 10.
Capped call counterparties advised Shockwave that they or their respective affiliates expect to enter into various derivative transactions with respect to the company’s common stock. This activity could increase the market price of the company’s common stock or the notes shortly after pricing.
The company continues to garner interest around the industry
Shockwave faced some acquisition interest itself, with some of the biggest names in medtech reportedly circling earlier this year. First, Bloomberg reported interest from Boston Scientific in April of this year. Later reports the following month linked Medtronic and Johnson & Johnson with potential interest in buying the company. However, nothing materialized on that front so far.
The company aims to transform the treatment of calcified cardiovascular disease. It seeks to establish a new standard of care for the interventional treatment of atherosclerotic cardiovascular disease. Shockwave offers differentiated and proprietary local delivery of sonic pressure waves for the treatment of calcified plaque.
Shockwave designed its minimally invasive, easy-to-use, safe treatment to improve patient outcomes. IVL (intravascular lithotripsy) safely modifies calcium while significantly reducing the risk of complications. It makes procedures more predictable and efficient.