Verrica Pharmaceuticals recently announced its entry into a non-binding term sheet for a term loan facility of up to $125 million. This news caused the company’s shares to fall 35% to $4.86. However, Verrica remains optimistic, expecting to close the loan facility by the end of this week.
Despite the recent dip in stock price, Verrica Pharmaceuticals had reached impressive heights earlier this year, with its stock reaching a 52-week high of $8.70 on February 23. Additionally, the company’s stock is still up 57% within the past year.
The terms of the term sheet state that Verrica plans to borrow $50 million immediately upon the transaction’s closure. Additional capital will be made available in tranches, depending on the achievement of specific revenue milestones. This five-year term loan is set to mature in July 2028.
Upon completing the transaction, Verrica anticipates extending its cash runway until the first quarter of 2025. This extension will result from the upfront $50 million loan and the $60 million in cash and cash equivalents it currently possesses as of March 31.
It is important to note that the term sheet does not serve as a definitive loan agreement, nor does it guarantee that Verrica will enter into a definitive loan agreement or borrow any funds through this proposed loan facility.
For more information, please contact Chris Wack.
