Synergy Pharmaceuticals Inc. announced that the company has closed on a $300 million debt financing structured as senior secured loans from CRG LP, a healthcare focused investment firm, and its lender syndicate.
“This non-dilutive financing enhances our cash position and provides us with financial flexibility to continue to execute on the launch of TRULANCE and achieve our business objectives, which we are confident will ultimately maximize long-term shareholder value,” said Gary Gemignani, EVP and Chief Financial Officer of Synergy Pharmaceuticals Inc. “The structure of this financing provides us with access to capital for support of our commercialization of TRULANCE and funds our current plans for the Company through 2019 when, based on our current assumptions, we expect to be cash flow breakeven.”
“We are excited for the opportunity to support Synergy at this important stage in the commercialization of TRULANCE,” said Luke Düster, Managing Director of CRG. “As part of our investment process at CRG, we performed extensive due diligence on TRULANCE, the market opportunity and Synergy’s overall business and commercial strategy. The results confirmed that TRULANCE has a substantial opportunity to serve the GI community and that there is tremendous potential to add significant value to the Company. This transaction demonstrates our confidence in Synergy’s product, commercial strategy and its team’s ability to optimize TRULANCE and successfully capitalize on this large and growing market.”
“We are pleased to partner with CRG, an investment partner that is known for its strategic investments in healthcare,” said Gary S. Jacob, Chairman and Chief Executive Officer of Synergy, “We remain committed to maximizing the potential benefit of TRULANCE and bringing this important new treatment option to healthcare providers and patients.”
The first tranche of $100 million was funded upon execution of the loan documents. The loan agreement provides for future borrowings, subject to the satisfaction of certain financial and revenue milestones and other borrowing conditions as follows: (i) an additional $100.0 million on or before February 28, 2018, and (ii) up to two additional tranches of up to $50.0 million each on or before March 29, 2019. The loans mature on June 30, 2025 and payments under the loan are interest only paid quarterly for the initial five-year period, followed by 12 equal quarterly installments of principal and interest during the final three years of the term, which converts to an eight-year interest only period if certain milestones are achieved. The loans carry an annual interest rate of 9.50%. The Company maintains the option to prepay outstanding loan amounts during the term of the loan. Further information with respect to the non-dilutive debt financing agreement with CRG are set forth in the Form 8-K to filed by the Company with the Securities and Exchange Commission reporting the entry into the loan transaction on September 1, 2017. Royalty/Revenue Interest Capital Advisors served as exclusive financial advisor for this transaction.