CTI to borrow $50 million of secured debt as part of $135 million deal

By Devika Patel

Knoxville, Tenn., Aug. 25 – CTI BioPharma Corp. plans to borrow $50 million in secured debt and raise another $60 million through selling a tiered royalty on sales of pacrinitib as part of a financing for a total of $135 million, according to a press release.

DRI Healthcare Trust is providing CTI with a $50 million credit facility. The facility bears interest at Libor plus 815 basis points, with a Libor floor of 1.75%.

For the first five years, the facility is interest-only. The principal will be due at maturity.

The company must maintain a minimum liquidity of at least $10 million during the term of the loan.

Proceeds will be used to fund the commercialization of pacritinib for the treatment of myelofibrosis patients with severe thrombocytopenia.

DRI will also provide CTI with $60 million upon accelerated approval of pactritinib. DRI will receive royalties on sales in the United States of 9.6% for the first $125 million of annual U.S. net sales, 4.5% between $125 million and $175 million of U.S. net sales, 0.5% between $175 million and $400 million of annual U.S. net sales with no entitlement above $400 million of annual U.S. net sales.

CTI will also receive an additional $25 million on achievement of certain sales milestones.

The target action date is Nov. 30 with a potential commercial launch by the end of the year.

Cowen worked as financial adviser to CTI on the transaction.

CTI BioPharma is a Seattle-based biopharmaceutical company.

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