scPharmaceuticals, a pharmaceutical company focused on developing and commercializing products that have the potential to optimize the delivery of infused therapies, advance patient care and reduce healthcare costs, entered into a binding term sheet with respect to a $100 million secured debt facility with funds managed by Oaktree Capital Management. The potential transaction is subject to the parties’ execution of definitive agreements and customary closing conditions to be stipulated therein. The definitive agreements are expected to be signed by mid-October. Cowen acted as exclusive financial advisor to scPharmaceuticals on this transaction.
scPharmaceuticals plans to use these available funds, together with cash on-hand, to repay indebtedness under its existing loan and security agreement and to execute on the launch of FUROSCIX, which received marketing approval from the U.S. Food and Drug Administration on Oct. 7.
Per the terms of the binding term sheet, Oaktree is expected to provide scPharmaceuticals with $50 million immediately upon signing of the definitive agreements. The remaining $50 million would be made available in two additional $25 million tranches based upon the achievement of pre-specified commercial milestones. The debt facility is expected to carry an interest rate equal to the three-month secured overnight financing rate (SOFR) plus 8.75%, with the interest rate capped at 11.75% per annum. Following the achievement of $100 million in trailing 12-month U.S. net sales of FUROSCIX, the interest rate margin will be lowered to 8.25%. The debt facility is expected to mature five years from funding and carry a 36-month interest-only period.
“With FUROSCIX now approved for marketing in the U.S., we have transitioned to a commercial stage company and combined with our current cash balances, this flexible financing provided by Oaktree will provide us with the resources to help drive a very robust commercial launch in the near term,” John Tucker, CEO of scPharmaceuticals, said. “We firmly believe that FUROSCIX will fundamentally change the treatment paradigm for worsening heart failure due to congestion by significantly reducing the complications and costs associated with hospital admissions, a significant percentage of which are unnecessary. We will work tirelessly to make FUROSCIX available to patients who can benefit from it as expeditiously as possible.”
“We are pleased to be partnering with scPharmaceuticals during this transformatory period marked by the recent approval and upcoming launch of FUROSCIX,” Steve DeNelsky, managing director, life sciences lending at Oaktree, said. “After a lack of innovation for several decades in the management of congestion due to fluid overload in heart failure patients, FUROSCIX represents an innovative breakthrough that now enables subcutaneous delivery of furosemide outside the hospital. Through this extension of capital, Oaktree looks forward to supporting the company’s leadership team in making this novel therapy available to adult patients across the United States.”
scPharmaceuticals reported $56 million of cash, cash equivalents, restricted cash and investments on June 30, 2022.
