Equillium, inc. enters into a loan and security agreement with oxford finance llc and silicon valley bank
On september 30, 2019 equillium, inc. entered into a loan and security agreement with oxford finance llc, as the collateral agent and a lender, and silicon valley bank, as a lender (together with oxford, the “lenders”), pursuant to which the lenders have agreed to lend the company up to $20.0 million in a series of term loans. upon entering into the agreement, the company borrowed $10.0 million from the lenders (“term a loan”). under the terms of the agreement, the company may, at its sole discretion, borrow from the lenders (i) up to an additional $5.0 million (“term b loan”) upon the company’s achievement of positive topline data in either the company’s (a) eq001 phase 1b agvhd trial or (b) eq001 phase 1b asthma trial, supporting a formal decision to advance into phase 2 development, and as confirmed by the company’s board of directors (the “term b milestone”) and (ii) up to an additional $5.0 million (“term c loan” and together with term a loan and term b loan, the “term loans”) upon the company’s achievement of positive topline data in both the company’s eq001 phase 1b agvhd trial and the company’s eq001 phase 1b asthma trial, supporting a formal decision to advance into phase 2 development, and as confirmed by the company’s board of directors (the “term c milestone”). the company may draw the term b loan during the period commencing on the date of the occurrence of the term b milestone and ending on the earliest of (i) december 31, 2020, (ii) 60 days after achieving the term b milestone, and (iii) the occurrence of an event of default and may draw the term c loan during the period commencing on the date of the occurrence of the term c milestone and ending on the earliest of (i) december 31, 2020, (ii) 60 days after achieving the term c milestone, and (iii) the occurrence of an event of default. the proceeds from the term loans under the agreement may be used to satisfy the company’s future working capital needs and to fund its general business requirements. the company’s obligations under the agreement are secured by a first priority perfected security interest in substantially all of the company’s current and future assets, other than its intellectual property (except rights to payment from the sale, licensing or disposition of such intellectual property). the company has also agreed not to encumber its intellectual property assets, except as permitted by the agreement. all of the term loans mature on june 1, 2024 (the “maturity date”) and will be interest-only through june 30, 2021, followed by 36 equal monthly payments of principal and interest; provided that if the company draws the term b loan, the term loans will be interest-only through december 31, 2021, followed by 30 equal monthly payments of principal and interest. the term loans will bear interest at a floating per annum rate equal to the greater of (i) 8.25% and (ii) the sum of (a) the prime rate reported in the wall street journal on the last business day of the month that immediately precedes the month in which the interest will accrue, plus (b) 3.00%. the company will be required to make a final payment of 4.50% of the original principal amount of the term loans drawn payable on the earlier of (i) the maturity date, (ii) the acceleration of any term loans, or (iii) the prepayment of the term loans (the “final payment”). the company may prepay all, but not less than all, of the term loans upon 30 days’ advance written notice to oxford, provided that the company will be obligated to pay a prepayment fee equal to (i) 3.00% of the principal amount of the applicable term loan prepaid on or before the first anniversary of the applicable funding date, (ii) 2.00% of the principal amount of the applicable term loan prepaid between the first and second anniversary of the applicable funding date, and (iii) 1.00% of the principal amount of the applicable term loan prepaid thereafter, and prior to the maturity date (each, a “prepayment fee”).
