Verrica Pharmaceuticals, a dermatology therapeutics company, entered into a non-binding term sheet for a term loan facility of up to $125 million, which the company expects to close by the end of this week.
Under the terms of the term sheet, Verrica intends to borrow $50 million immediately following the close of the transaction, with additional capital available in tranches based on the achievement of certain revenue milestones. The facility is a five-year term loan that matures in July 2028. The term loan will bear interest at a rate based upon the secured overnight financing rate (SOFR), subject to a SOFR floor of 4%, in addition to a margin of 8% per annum. The term sheet also contemplates the issuance to the lender, which has yet to be revealed, of a warrant to purchase $3.1 million of the company’s common stock, with an exercise price equivalent to the trailing 10-day volume weight average price of the common stock. Upon close of the transaction, Verrica expects the $50 million upfront plus its $60 million in cash and cash equivalents on-hand as of March 31 to extend the company’s cash runway into Q1/25.
The term sheet does not represent a definitive loan agreement and there is no guarantee that the company will enter into a definitive loan agreement, close the proposed loan facility with the lender or borrow any funds pursuant to the loan facility.
