Verona unit secures up to $400 million via term loan facility

By Mary-Katherine Stinson

Lexington, Ky., Jan. 2 – Verona Pharma plc’s wholly owned subsidiary Verona Pharma, Inc. on Dec. 27 secured up to $400 million through a term loan facility with funds managed by Oxford Finance LLC and Hercules Capital, Inc, according to an 8-K filing with the Securities and Exchange Commission.

Oxford is the collateral agent.

The new facility is made up of a term loan A advance in an aggregate amount of $50 million, which was funded on the effective date, a term loan B advance totaling $100 million, a term loan C advance totaling $75 million, a term loan D advance totaling $75 million, all available subject to certain terms and conditions, and a term loan E advance, available in the sole discretion of the lenders and subject to certain terms and conditions, equaling $100 million.

The facility matures Dec. 1, 2028.

The term B loan will be available starting on the date of the FDA’s approval of ensifentrine through and including the earliest of 30 days immediately following and Sept. 15, 2024. The term C loan will be available during the period starting on the later of Sept. 15, 2025 and before Sept. 30, 2025. The term D loan will be available starting on the later of Feb. 15, 2026 and before March 31, 2026. Each tranche will be available based on the borrowing of the prior tranche and based on the company’s achievement of a specified net sales milestone.

Each advance bears interest at a floating rate equal to the greater of one-month CME term SOFR and 5.34% plus 585 bps. The basic rate for the term A loan cannot be less than 11.19% and, for each other term loan, less than the basic rate on the business day immediately prior to the funding date.

The basic rate for each term loan cannot increase by more than 200 bps above the applicable basic rate.

The facility has an interest-only period until the payment date immediately preceding June 1, 2028.

There is a prepayment fee of 200 bps if paid before the second anniversary, 150 bps if paid after the second anniversary and 100 bps if paid after the third anniversary.

Proceeds will be used for general corporate and working capital purposes, and a portion of the proceeds of the term A loan was drawn to repay in full the existing outstanding debt under the loan and security agreement dated Oct. 14, 2022.

The clinical-stage biopharmaceutical company focused on respiratory diseases is based in London.

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