Article 1.01. The conclusion of an important definitive agreement.
Loan and Security Agreement
At October 29, 2021 (the “Closing Date”), Mersana Therapeutics, Inc. (the âCompanyâ) has entered into a loan and guarantee agreement (the âLoan Agreementâ) by and between the Company, Oxford Finance LLC, in its capacity as guarantee agent (in this capacity, the “Agent”) and lender, and Silicon Valley Bank as a lender (collectively, the “Lenders”), under which term loans of a maximum amount $ 100.0 million is available to the Company, consisting of (i) a tranche A term loan for a total principal amount of up to $ 60.0 million available at any time no later than December 31, 2022 at the choice of the Company, $ 25.0 million of which was disbursed at the balance sheet date and used, in part, to repay the company’s existing debt; (ii) a conditional term loan of tranche B for a total principal amount of $ 10.0 million available to the Company at any time no later than December 31, 2022, within 90 days of the date the Company (x) enrolled and administered the first patient in a phase I trial for XMT-2056 and (y) enrolled and administered the first patient in a phase I trial for XMT-1660, provided that the UpRi UPLIFT cohort intended to support the submission of a biologics license application is underway; (iii) a conditional term loan of tranche C for a total principal amount of
$ 10.0 million available to the Company at any time no later than June 30, 2023, within 90 days of receipt by the Company of sufficient positive data from the UpRi UPLIFT registration trial to support a biologics license application; and (iv) a conditional term loan of tranche D for a total principal amount of $ 20.0 million available at any time no later than November 1, 2024 (extended to
November 1, 2025 if the Tranche C Term Loan milestone is met), which is available at the sole discretion of the Lenders, subject, in each case to the foregoing, to certain other conditions.
The term loans bear interest at a variable rate equal to the greater of (i) 8.50% and (ii) the prime rate plus 5.25%. The loan agreement provides for interest payments only up to November 1, 2024 (extended to November 1, 2025 if the Milestone of the Tranche C Term Loan is reached) (the âAmortization Dateâ). The total outstanding principal balance of term loans must be repaid in monthly installments from the amortization date on the basis of a repayment schedule equal to (i) 24 months if the term loan stage of the Tranche C is not reached and (ii) 12 months if the milestone of the Tranche C term loan is reached. All unpaid principal and accrued and unpaid interest on each term loan are due and payable in full on October 1, 2026 (the due date “).
The Company paid a facility fee of $ 125,000 on the closing date and has agreed to pay a facility fee equal to 0.50% of the original principal amount of each subsequent financing under the facility. The Company will be required to pay a final payment charge of 4.25% of the initial principal of any term loan financed in repayment no earlier than (i) the early repayment of this term loan, (ii) the date maturity and (iii) acceleration of obligations. At the option of the Company, the Company may choose to prepay all or part of the outstanding loans, subject to an early repayment commission equal to the following percentage of the principal amount prepaid: 3.00% if an advance is prepaid within the first 12 months following the applicable advance date, 2.00% if an advance is prepaid after 12 months but no later than 24 months after the applicable advance date, and 1.00% if an advance is prepaid at any time after 24 months of the applicable advance date but before the due date.
As part of its conclusion of the Loan Agreement, the Company granted the Agent a security interest over substantially all of the Company’s personal property held or subsequently acquired, excluding intellectual property (but including the right to payments and the proceeds of intellectual property), and a negative pledge on intellectual property. The Loan Agreement also contains customary representations and warranties and positive and negative covenants, as well as customary events of default. Some of the usual covenants limit the ability of the Company and its subsidiaries, among others, to incur future debts, grant liens, make investments, make acquisitions, distribute dividends, make certain restricted payments. and to sell assets, subject in each case to certain exceptions. Failure by the Company to comply with these covenants would result in an event of default under the loan agreement and could result in the acceleration of obligations owed under the loan agreement.
The foregoing description of the Loan Agreement is qualified in its entirety by reference to the full text of the Loan Agreement which the Company intends to file as an attachment to its annual report on Form 10-K for the year ending
December 31, 2021.
Article 1.02. Termination of an important definitive agreement.
At October 29, 2021, in conjunction with the closing of the loan agreement and the initial borrowing under the Tranche A term loan, the Company used a portion of the proceeds of this loan to fully repay all outstanding amounts due under the term loan agreement. existing loan and guarantee of the Company, as of May 8, 2019, as amended to date, by and between the Company and Silicon Valley Bank, and terminated all commitments made by lenders to extend additional credit hereunder and all guarantees and sureties given by the Company to lenders hereunder.
Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The information contained in Section 1.01 of this current report on Form 8-K is incorporated herein by reference.
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