Response Genetics, Inc., a company focused on the development and sale of molecular diagnostic tests for cancer, and SWK Funding LLC ("SWK"), a wholly-owned subsidiary of SWK Holdings Corporation, as the agent, entered into a credit agreement (the "Credit Agreement") pursuant to which the lenders party thereto provide Response Genetics (the "Company") a term loan in the principal amount up to $12.0 million (the "Loan").
"The proceeds from this essentially non-dilutive financing is expected to provide Response Genetics the necessary funding to effectively execute on the growth initiatives that we put in place over the past twelve months, namely, our newly launched ResponseDX: Tissue of OriginTM test which we acquired when we purchased the assets of Pathwork Diagnostics, our TC/PC pathology partnering program, and our recently introduced ResponseDX: Comprehensive Lung Profile which is inclusive of our next generation sequencing platform," said Thomas A. Bologna, Chairman and Chief Executive Officer of Response Genetics.
"The debt financing we executed for the Company illustrates SWK's ability to create customized investment structures for life science companies," said Brett Pope, CEO of SWK Holdings Corporation. "We are very impressed with the quality and depth of Response Genetic's management team, and its extensive test menu. We are excited to support the Company's efforts to bring important molecular diagnostic tests to patients, including the recently launched ResponseDX: Tissue of OriginTM test."
SWK served as the agent, under the Credit Agreement and the company was advised in the transaction by Armentum Partners. Response Genetics drew the first tranche of $8.5 million at the closing of the new credit facility and a second tranche is conditional upon the Company's request and the achievement of a revenue milestone. The Loan matures on July 29, 2020 and accrues interest at an annual rate of 12.5% plus the Libor Rate (as defined in the Credit Agreement), with the Libor Rate being subject to a minimum floor of 1.0%. In connection with the closing of the first tranche of the Loan, the Company issued SWK a warrant to purchase an aggregate of up to 681,090 shares of common stock at an exercise price of $0.936 per share which is a 20% premium to the Company's stock price on July 29, 2014.
Response Genetics, Inc. is a CLIA-certified clinical laboratory focused on the development and sale of molecular diagnostic testing services for cancer. The company's technologies enable extraction and analysis of genetic information derived from tumor cells stored as formalin-fixed and paraffin-embedded specimens. The Company's principal customers include oncologists and pathologists. In addition to diagnostic testing services, the Company generates revenue from the sale of its proprietary analytical pharmacogenomic testing services of clinical trial specimens to the pharmaceutical industry.
SWK Holdings Corporation is a specialized finance company with a focus on the global healthcare sector. SWK partners with ethical product marketers and royalty holders to provide flexible financing solutions at an attractive cost of capital to create long-term value for both SWK's business partners and its investors. SWK believes its financing structures achieve an optimal partnership for companies, institutions and inventors seeking capital for expansion or capital and estate planning by allowing its partners to monetize future cash flow with minimal dilution to their equity stakes.