Acer Therapeutics signs term loan, royalty agreement with Marathon

Chicago, March 7 – Acer Therapeutics Inc. signed a credit agreement on Friday with MAM Aardvark, LLC (Marathon) for up to $42.5 million in the form of a senior secured term loan facility, according to an 8-K filed with the Securities and Exchange Commission.

The term loan will only be available in a single draw following approval of ACER-001. Approval for the product must be received by Dec. 31, 2022.

Interest will be at an annual rate of 13.5%. Acer may optionally capitalize up to 4% of the interest and can make that election on the date the loan is funded through the third anniversary date.

Starting on the third anniversary, there is amortization at a rate of 2.78%, payable monthly.

The final maturity date is the earlier of Dec. 31, 2028 or six years after the funding date.

There are penalties for prepayment. If the term loan is prepaid before March 4, 2025, the penalty is the greater of 5% or the amount of interest that would have accrued from the date of prepayment through March 4, 2025. For any prepayment between March 4, 2025 and March 4, 2026, the penalty is 3%. The penalty steps down to 2% between March 4, 2026 and March 4, 2027. After March 4, 2027, the penalty is 1%.

Marathon is listed as the agent, sole lead arranger and bookrunner.

There is a $212,500 commitment fee for the term loan, payable to Marathon. An additional $637,500 commitment fee is payable after approval of ACER-001 or if there is any change of control of the company or the product.

There is an accordion feature for an additional $50 million, subject to lender approval.

Marathon will also receive a 2% royalty fee on revenue from ACER-001 on a quarterly basis, capped at $15 million.

Proceeds will be used to refinance certain other debt of the company, including a new $6.5 million bridge loan the company also signed on Friday from SWK Funding LLC. Proceeds will also be used for other working capital and general corporate purposes.

Reedland Capital Partners was the company’s exclusive financial adviser.

Acer is a Newton, Mass.-based developer of therapies for patients with serious, rare and life-threatening diseases.

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