Profound Medical entered a term loan agreement for up to $18.75 million in available borrowing capacity with CIBC Innovation Banking.

The first tranche of $12.5 million was funded upon execution of the term loan agreement. At Profound’s option, a second tranche of up to an additional $6.25 million will be available to the company through December 31, 2019, subject to the satisfaction of certain financing and product development milestones and other borrowing conditions.

The agreement will be secured against the assets of the company and is subject to TSX approval.

Profound intends to use the proceeds to repay its current debt – including the remaining balance under its April 2015 loan agreement with Knight Therapeutics – and for working capital purposes.

“This transaction allows us to consolidate our debt with one banking partner, and lowers the overall cost of capital compared to our prior term debt obligations,” said Arun Menawat, CEO of Profound. “Additionally, the agreement cost effectively and flexibly adds to the working capital available to the company as we scale the business going forward.”

“We are pleased to support Profound Medical’s continued efforts to grow and deliver state-of-the-art treatments to patients, including those struggling with prostate cancer,” said Jeff Chapman, managing director, CIBC Innovation Banking.

In connection with this transaction, Profound issued 321,714 common share purchase warrants to CIBC. The warrants include an exercise price of 0.97 per share and a term of five years.