ONWARD Medical, a medical technology company, and its subsidiaries signed a loan agreement of up to €52.5 ($56.5) million with U.S.-based lender Runway Growth Capital. The loan will be used to repay all of the company’s outstanding debt, fund the company’s upcoming commercial and clinical activities and for working capital and general corporate purposes.
The facility is divided into five individual credit tranches. The first initial credit tranche of €16 million will be available upon signing of the loan agreement and will be drawn down immediately. Three subsequent credit tranches of €14 ($15) million, up to €5 ($5.4) million and up to €7.5 ($8.1) million will be available to be drawn by the company until March 31, 2025, July 31, 2026 and January 31, 2027, respectively, in each case subject to the company’s achievement of certain milestones under the loan agreement. The fifth credit tranche of up to €10 million is uncommitted and available in Q1/27 upon the sole discretion of the lender.
The loan bears interest at a rate equal to Term Secured Overnight Financing Rate (SOFR) for a three-month interest period (currently at 6% and subject to a 4.25% floor), plus a margin of 6.5%.
The loan documents provide for a number of affirmative and negative covenants by the company customary for financings of this type, including financial covenants relating to revenue, earnings before interest taxes depreciation and amortization (EBITDA) and minimum liquidity targets. The loans advanced under the loan agreement will be secured by a security interest in substantially all of the assets of the ONWARD Medical and its subsidiaries.
In addition, upon signing of the debt financing, the company will issue to the lender warrants which will entitle the lender to purchase ordinary shares in the capital of the company at an exercise price per newly-issued share calculated on the basis of the lowest 30-day volume-weighted average price (VWAP) between April 9, 2024 and the signing of the debt financing. The number of shares subject to the warrants are 5% of the drawn down principal amount initially and upon each subsequent loan advance, divided by the exercise price of €4.83.
“ONWARD is pleased to enter this long-term relationship with one of the top U.S. lenders providing growth capital to innovative life science companies,” Dave Marver, CEO of ONWARD Medical, said. “This relationship will diversify our capital structure and help to fund many of our upcoming milestones, including expected launch of our ARC-EX System later this year and commencement of our pivotal study for ARC-IM, called Empower BP. We look forward to working closely with Runway to provide fuel to our effort to bring solutions to the profound unmet needs of people with spinal cord injury.”
“We are excited to partner with ONWARD Medical to provide capital for the continued development of their innovative therapies improving the lives of patients with spinal cord injuries,” Greg Greifeld, managing director and deputy chief investment officer of Runway Growth Capital, said. “Given our experience in the healthcare space, we understand the critical impact that advancements in medical technology can have on patients’ lives and this investment will help ONWARD Medical achieve its upcoming milestones and revolutionize the standard of care for the spinal cord injury community.”
ONWARD Medical was advised by Stifel.
