Item 1.01 Entry into a Material Definitive Agreement.
Loan and Security Agreement
On June 24, 2021 (the "Closing Date"), Fennec Pharmaceuticals, Inc, a Delaware
corporation (the "Company"), and wholly owned subsidiary of Fennec
Pharmaceuticals Inc. ("Fennec") announced a second amendment to its existing
senior debt facility with the Life Sciences Group at Bridge Bank, a division of
Western Alliance Bank, an Arizona corporation (the "Bank"), increasing the size
of the facility from $18.0 million to $20.0 million.
The U.S. operating subsidiary of Fennec Pharmaceuticals Inc. entered into a
Second Amendment to the 2019 Loan and Security Agreement with Bridge Bank. This
amendment provides Fennec with a $20 million debt facility comprised of three
term loans. Term Loan A consists of $5.0 million to be funded upon closing. Term
Loan B consists of $7.5 million to be funded upon New Drug Application (NDA)
approval of PEDMARKTM in the U.S. Term Loan C consists of $7.5 million to be
funded upon the occurrence of a revenue event in 2022. The interest-only period
for the facility has the ability to be extended from 18 months to 24 months from
the funding of Term Loan B, provided that Term Loan C is funded, and certain
conditions are met. The Company intends to use the proceeds from the loans to
provide working capital for commercial readiness activities prior to NDA
approval as well as commercialization activities for PEDMARK, if approved.
The Company paid a good faith deposit of $42,600 to the Bank on June 24, 2021,
which amounts shall be applied toward the Bank Expenses (as defined the Loan and
Security Agreement) payable on the Closing Date and, if any good faith deposit
is remaining thereafter, it shall be refunded to the Company. On that same day,
the Company paid the Bank 8,400 to fund Term Loan A. The Company may voluntarily
prepay the Term Loan in full, but not in part prior to its scheduled maturity
date (whether by voluntary prepayment, mandatory prepayment or otherwise) a
prepayment premium equal to 1.00% of the outstanding principal will apply for
the duration of the loan. Borrower shall maintain at all times unrestricted cash
and cash equivalents in an amount equal to or greater than three times
Borrower's monthly cash burn amount. Monthly cash burn is defined as: for any
period of determination, Borrowers' monthly net income, plus amortization and
depreciation and calculated on a trailing six-month basis, plus the monthly
average of the current portion of principal on interest-bearing liabilities due
and payable in the immediately succeeding three-month period. The obligations
under the Loan and Security Agreement are secured by a first priority security
interest in all assets of the Borrower, excluding intellectual property.
Intellectual property shall be subject to a double negative pledge.
Events of default which may cause repayment of the Term Loans to be accelerated
include, among other customary events of default, (1) non-payment of any
obligation when due, (2) the failure to perform any obligation required under
the Loan and Security Agreement and to cure such default within a reasonable
time frame, (3) the occurrence of a Material Adverse Event (as defined in the
Loan and Security Agreement), (4) the attachment or seizure of a material
portion of the Borrower's assets if such attachment or seizure is not released,
discharged or rescinded within 10 days, and (5) if the Borrower becomes
insolvent or starts an insolvency proceeding or if an insolvency proceeding is
brought by a third party against the Borrower and such proceeding is not
dismissed or stayed within 30 days. The Loan and Security Agreement includes
customary loan conditions, Borrower representations and warranties, Borrower
affirmative covenants and Borrower negative covenants for secured transactions
of this type.
A copy of the Loan and Security Agreement is attached hereto as Exhibit 10.1 and
is incorporated herein by reference. The foregoing is a summary description of
the terms of the Loan and Security Agreement and does not purport to be
complete.
Item 8.01 Other Events.
On June 24, 2021, Fennec issued a press release announcing its entry into the
Loan and Security Agreement. A copy of the press release is attached hereto as
Exhibit 99.1 and is incorporated by reference herein.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
Exhibit 10.1 Second Amendment to the Loan and Security Agreement dated as of
June 24, 2021 by and among Fennec Pharmaceuticals, Inc. and Western
Alliance Bank.
Exhibit 99.1 Press Release dated June 24, 2021
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