Reata Pharmaceuticals amended its loan and security agreement with Oxford Finance and Silicon Valley Bank, increasing the term loan facility from $45 million to $125 million.
Proceeds from the loan will be utilized primarily to support Reata’s multiple Phase 2 and 3 clinical trial programs for bardoxolone methyl and omaveloxolone.
The loan proceeds are available to Reata in two tranches. The first $80 million tranche refinanced the $20 million principal amount that was outstanding and provided $60 million of additional cash to the company, prior to the payment of accrued interest, fees, and expenses incurred in connection with the transaction.
The additional $45 million tranche will be available to Reata until December 31, 2019, after Reata has positive topline registrational data in either of its ongoing registrational clinical trials of (a) bardoxolone methyl in chronic kidney disease caused by Alport syndrome or (b) omaveloxolone in Friedreich’s ataxia. The loan agreement provides for interest-only payments during the first 24 months of the facility or the first 36 months of the facility if the $45 million tranche is drawn.
The loan bears interest at a floating rate equal to the sum of 7.79% plus the greater of 1.91% or the 30-day U.S. Dollar LIBOR rate (which shall not exceed 4.50%), but will not be set below 9.70% or above 12.29%. The loan is also subject to a 6.5% of tranche A and 4.0% of tranche B final payment when principal is paid in full at maturity on June 1, 2023, upon acceleration, or upon prepayment in full. Each tranche of the loan is prepayable in full, including the final payment and certain prepayment fees, any time at the option of Reata.
The loan is senior debt and is secured by substantially all of Reata’s assets, including its owned intellectual property. The loan agreement contains customary covenants, but does not contain any financial covenants, other than the requirement that the Company and its guarantors (if any) collectively must maintain at least $15 million of cash and cash equivalents.
Reata is a clinical-stage biopharmaceutical company that develops novel therapeutics for patients with serious or life-threatening diseases by targeting molecular pathways involved in the regulation of cellular metabolism and inflammation.
