Sierra Oncology gets agreement for $125 million term loans in four parts

By Wendy Van Sickle

Columbus, Ohio, Jan. 25 – Sierra Oncology Inc. entered into a loan and security agreement on Jan. 21 with Oxford Finance, LLC as collateral agent providing for $125 million in a series of term loans, according to an 8-K filing with the Securities and Exchange Commission.

The agreement provided for an initial $5 million term loan with $15 million of term B loans to become available upon Sierra’s receipt of positive topline data from its clinical trials of product candidate momelotinib, which is under investigation for the treatment of myelofibrosis, and the company’s receipt of certain minimum gross cash proceeds from the sale of equity securities and/or up front payments in connection with a licensing transaction for momelotinib. Sierra may draw the term B loans within 30 days after the occurrence of the required milestones but no later than June 30.

A further $55 million, or $70 million if the term B loans have not been made by June 30, will be available under a term C tranche upon Sierra’s of the final approval from the United States Food and Drug Administration for marketing and sales of momelotinib as well as the achievement of Sierra of the previous conditions mentioned that are required for the term B loans. The term C loans may be drawn within 30 days of the completion of the term C milestone but no later than Dec. 21, 2023.

Finally, $50 million of term D loans is available at the lenders’ sole discretion.

Proceeds may be used for working capital and general corporate purposes.

The loans will bear interest at the prime rate plus a margin of 525 basis points with a floor of 8.5%.

Beginning March 1, 2025, if either the term B loan or the term C loan is not made, or Sept. 1, 2025, if both the term B loan and the term C loans are made, Sierra must repay the term loans in consecutive equal monthly payments of principal, together with applicable interest, in arrears. All unpaid principal and interest is payable in full on Jan. 1, 2027.

The late-stage drug development company dedicated to delivering targeted therapies for rare cancers is based in Vancouver, B.C.

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