Lexicon Pharmaceuticals entered into a loan facility with Oxford Finance that provides up to $150 million in borrowing capacity designed primarily to support commercial preparations and the potential launch of sotagliflozin in heart failure.
The loan facility carries a floating interest rate equal to the 30-day U.S. Dollar LIBOR plus 7.90%, with a floor not less than 8.01%.
In connection with the initiation of the facility and first tranche funding, Lexicon granted Oxford a warrant to purchase 420,673 shares of Lexicon’s common stock at an exercise price of $2.08 per share, exercisable through March 17, 2027. Upon funding of the second and third tranches, Lexicon will grant Oxford warrants to purchase additional shares of its common stock having a value equal to 1.75% and 0.875%, respectively, of each such tranches. Each warrant will have an exercise price equal to an average closing price of the shares prior to the warrant’s grant and will be exercisable for a five-year period.
Lexicon’s obligations under the loan facility are secured by a first lien security interest in all of the assets of Lexicon and its subsidiaries and are subject to customary affirmative and negative covenants, including a financial covenant relating to net sales of sotagliflozin following regulatory approval.
“This loan facility provides us with access to a committed source of funding to support commercial preparations and the potential launch of sotagliflozin in heart failure along with substantial financial flexibility as we approach the planned resubmission of our New Drug Application for sotagliflozin in heart failure and expected topline results from two Phase 2 proof-of-concept studies of LX9211 in neuropathic pain,” said Jeffrey L. Wade, Lexicon’s president and chief financial officer.
The loan facility consists of up to four tranches, each maturing in March 2027. An initial $25 million tranche was funded at closing. The second $25 million tranche is available for draw at Lexicon’s option prior to August 31, 2022 contingent upon the acceptance of filing by the U.S. Food and Drug Administration of Lexicon’s planned resubmission of its application for U.S. regulatory approval of sotagliflozin for heart failure. The third $50 million tranche is available for draw at Lexicon’s option prior to June 30, 2023 contingent upon U.S. regulatory approval of sotagliflozin for heart failure. The final $50 million tranche is available for draw, at Lexicon’s option and subject to Oxford’s consent, at any time prior to the expiration of a three or four-year interest-only payment period.