Heron Therapeutics signs $50 million working capital facility

By Wendy Van Sickle

Columbus, Ohio, Aug. 22 – Heron Therapeutics, Inc. signed a $50 million working capital credit facility this month with Hercules Capital, Inc., according to a news release.

The company drew about $24.5 million of proceeds at closing. A $5 million tranche is available through Dec. 15, 2024, and a $20 million tranche is available from the full draw of the $5 million tranche through Dec. 15, 2025.

The loan agreement has a term of four years, with a springing maturity on the date that is 91 days prior to the stated maturity of the company’s existing senior secured convertible notes if they are still outstanding at that time.

The loans do not have scheduled amortization payments and accrue interest at a floating rate that its initially equal to 9.95%.

The loans also accrue paid-in-kind interest at a fixed rate of 1.5% per annum, which is due upon maturity or at payoff.

In connection with the entry into the loan agreement, Heron issued warrants to the lenders to purchase up to an amount of shares of common stock equal to 2% of the principal amount of loans funded by the lenders. The loan agreement also requires Heron to issue additional warrants to the lenders at the time of each drawdown of further tranches. Each warrant is exercisable for seven years from the date of issuance.

Heron also completed a $30 million equity financing, and the two financings are expected to provide the company enough capital to achieve profitability, chief executive officer Craig Collard said in the release.

The pharmaceutical company is based in Redwood City, Calif.

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