Verastem increases loan agreement to $75 million, cuts interest rate

By Angela McDaniels

Tacoma, Wash., April 23 – Verastem, Inc. amended its loan and security agreement with Hercules Capital, Inc. to increase the borrowing limit to $75 million from $50 million, lower the interest rate by 175 basis points and make other changes, according to a company news release.

Under the prior agreement, the term loan provided for interest-only payments until May 1. Thereafter, amortization payments were to be payable monthly in 20 installments of principal and interest.

Under the amendment, the term loan will now mature on Dec. 1, 2022 and provides for interest-only payments until April 1, 2021, which may be extended if certain revenue metrics are achieved.

The company had $25 million outstanding under the loan agreement prior to the amendment and drew an additional $10 million on the amendment date. The remaining $40 million of borrowing capacity may be drawn in multiple tranches, including $15 million upon Verastem generating certain pre-specified cumulative net product revenues and $25 million available through Dec. 31, 2021, subject to Hercules’ approval and certain pre-specified conditions.

The increased loan facility proceeds will be available for the ongoing launch of Copiktra in the United States, the company’s other ongoing development programs and for general corporate purposes.

“We are extremely pleased to execute this new amendment with Hercules as it effectively refinances our existing loan and implements more favorable terms which we believe are more in line with a commercial-stage financing arrangement, including a lower overall interest rate and an extended repayment timeline,” chief financial officer Rob Gagnon said in the news release.

“Collectively, the new terms provide greater financial flexibility as we continue to execute on the commercial rollout of Copiktra and advance our other pipeline programs.”

Boston-based Verastem, which operates as Verastem Oncology, is a commercial biopharmaceutical company with a focus on cancer.

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