Phathom Pharmaceuticals: Loan and Guarantee Agreement (Form 8-K)


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Loan and Guarantee Agreement

On September 17, 2021 (the “Closing Date”), Phathom Pharmaceuticals, Inc. (the “Company”) entered into a loan and guarantee agreement (the “Loan Agreement”) with Hercules Capital, Inc., in its as administrator and agent and guarantee agent and as lender (in that capacity, the “Agent” or “Hercules”) and other financial institutions which from time to time become parties to the Loan Agreement as lenders ( collectively, the “Lenders”).

Rising. The Loan Agreement provides for term loans of up to $ 200.0 million in aggregate principal amount (the “Term Loan”) in installments. The tranches consist of (i) a first tranche consisting of term loans with a total principal amount of $ 100.0 million, all of which has been financed in favor of the Company at the closing date (the “First advance”), (ii) of a second tranche of up to an additional $ 50.0 million, which will become available to the Company once the main effectiveness evaluation criteria are specified in the protocol of the Company’s phase 3 trial investigating vonoprazan for the cure and maintenance of healing in erosive esophagitis with acceptable safety data, which will be made available to the Company results support application submission new drug or an additional new drug request without the need for another phase 3 study and will be available, if the specified conditions are met, until December 15, 2022, (iii) a third installment consistent into an additional $ 25.0 million, which will become available to Phathom upon obtaining (a) FDA approval of Phathom’s new drug application for vonoprazan and amoxicillin, or its new drug Application vonoprazan, amoxicillin and clarithromycin, in each case for an indication relating to the treatment of H. pyloriwith an approved indication on the claim that is generally consistent with that sought in Phathom’s New Drug Application; and (b) filing a Phathom New Drug Application or Vonoprazan Supplemental New Drug Application for indications relating to healing and maintaining healing of erosive esophagitis (steps (a)) and (b), together, the “second stage of performance”), and will be available, if the specified conditions are met, until September 30, 2023, and (iv) a fourth tranche comprising up to 25.0 million euros. additional dollars, which will be available, if the specified conditions are met, until March 31, 2024, upon fulfillment of the same conditions required for the availability of the third tranche. The Company intends to use the proceeds of the term loan advances for working capital and general business purposes. In addition, approximately $ 54 million of the proceeds of the first advance were used to fully settle and repay the Company’s debt under its previously outstanding credit facility with Silicon Valley Bank (the “SVB Term Loan “).

Interest rate and Refund. The Term Loan will mature on October 1, 2026 (the “Maturity Date”). The term loan bears (i) cash interest at a variable annual rate equal to the greater of (a) 5.50% and (b) the prime rate (as reported in The Wall Street Journal) plus 2.25 % (the “interest rate”) and (ii) payment in kindinterest at an annual interest rate equal to 3.35%. Phathom can only make interest payments until October 1, 2024, which can be extended until October 1, 2025, upon the achievement of the second performance milestone by September 30, 2024 and provided that no default or defect does not exist, and which may be extended until October 1, 2026, subject to FDA approval of Phathom’s new drug application (or additional new drug application) for vonoprazan for an indication for the cure and maintenance of the cure for erosive esophagitis with an approved label indication that is generally consistent with that sought in Phathom’s New Drug Application (or Drug Application Additional News) (the “Third Performance Milestone”) prior to September 30, 2025 and no defaults or events of default exist (the “Interest Only Period”). After the interest-only period, the principal balance and related interest must be repaid in equal monthly installments until the maturity date.

Commitments, declarations and guarantees; Other provisions.The loan agreement contains customary closing costs, prepayment charges and provisions, events of default, and representations, guarantees and commitments, including a financial commitment requiring Phathom to maintain certain levels of liquidity subject to agreement. control in favor of the agent (less accounts payable not paid within 120 days of invoice) (“qualifying cash”), and effective May 15, 2023, after three months of net income from the sale of vonoprazan and products containing vonoprazan. The revenue commitment will be canceled at any time Phathom maintains qualifying liquidity equal to at least 60.0% (before the third performance milestone) and 35% (after the third performance milestone) of the total principal outstanding amount. term loan, or Phathom’s market capitalization is at least $ 900.0 million.

Security. As security for the obligations, the Company has granted Hercules a first ranking security interest in all of the Company’s rights, titles and interests in, on and under substantially all of the Company’s property, including intellectual property.

The foregoing description of the terms of the loan agreement is not complete and is qualified in its entirety by reference to the full text of the loan agreement, which will be filed as attachments to the company’s next quarterly report. on form 10-Q.

To guarantee

In connection with the conclusion of the loan agreement, the Company issued to Hercules a warrant (the “Warrant”) to purchase a certain number of common shares of the Company, with a par value of $ 0.0001. per share (the “Common Shares”) equal to 2.5% of the total amount of term loan advances that are funded, as such amounts are funded. On the closing date, the Company issued a subscription warrant for 74,783 common shares. The Warrant may be exercised for a period of seven years from the date of issue to a per shareexercise price equal to $ 33.43, which was the closing price of the Company’s common shares on September 16, 2021.

The issuance of the Warrant by the Company to Hercules was made on the basis of the exemption from registration contained in Section 4 (a) (2) of the Securities Act of 1933, as amended.

The foregoing description of the terms of the warrant is not complete and is qualified in its entirety by reference to the full text of the warrant, which will be filed as an attachment to the Company’s next quarterly report on a form. 10-Q.

Termination of a material definitive agreement

The information provided in point 1.01 of this current report on form 8-Kconcerning the termination of the term loan SVB is incorporated by reference in this section 1.02.

Creation of a direct financial obligation or obligation under a ImbalanceSheet arrangement of a registrant.

The information provided in point 1.01 of this current report on form 8-Krelating to the Loan Agreement is incorporated by reference in this Item 2.03.

Unregistered sales of equity securities.

The information provided in point 1.01 of this current report on form 8-Krelating to the Warrant is incorporated by reference in this Section 3.02.

Disclaimer

Phathom Pharmaceutical Inc. published this content on September 20, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on September 20, 2021 12:11:00 PM UTC.

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