CytRx Corporation announced that it has entered into a long-term loan and security agreement with Hercules Technology Growth Capital, Inc. and Hercules Technology III, L.P. for up to $40 million in financing.
CytRx has received the first $25 million of financing under the loan and security agreement. The proceeds will be used for pre-commercialization and manufacturing activities for aldoxorubicin, clinical development, and general corporate purposes. A second tranche of up to $15 million will be available on or before December 31, 2016 if CytRx announces positive data from its global pivotal Phase 3 clinical trial of aldoxorubicin for the treatment of soft tissue sarcoma and initiates a clinical trial of a second novel drug candidate based on CytRx’s LADR technology platform.
“This financing is an important step for CytRx as we complete our pivotal, global Phase 3 trial with aldoxorubicin and prepare for its commercial launch,” said Steven A. Kriegsman, Chairman and CEO.
“We are pleased to team up with CytRx in advance of their results from the pivotal Phase 3 clinical trial. This financing will support CytRx through this key milestone and the future launch of aldoxorubicin,” said Anup Arora, Managing Director at Hercules Technology.
The financing is in the form of a 48-month term loan bearing interest at a rate of 9.5% per annum, subject to the variability of the prime interest rate. In the first year of the long-term loan, only interest is payable. If the regulatory milestone relating to data from the aldoxorubicin Phase 3 trial is positive, the interest-only period will be extended for an additional six months. If the second tranche of$15 million is funded to CytRx under the loan and security agreement, the interest-only period will be extended for another six months.
In connection with the loan and security agreement, CytRx paid and issued to the lenders certain fees of approximately $450,000 and warrants to purchase approximately 630,000 shares of common stock of CytRx at an exercise price of $2.05 per share.
Armentum Partners, through Trump Securities, LLC and Reedland Capital Partners, through Merriman Capital, Inc., a registered broker-dealer and member FINRA/SIPC, acted as financial advisors to CytRx in connection with the transaction.
Lead image photo credit: Simon Cunningham.