Filing Overview
Bicycle Therapeutics plc filed a Form 8-K dated September 30, 2020, reporting entry into a material loan and security agreement with Hercules Capital, Inc. The company is an England and Wales biotechnology company listed on Nasdaq through its American Depositary Shares under the symbol BCYC.
Material Financial Terms
- Total borrowing capacity: Up to $40.0 million.
- Funded at closing: $15.0 million term loan funded on September 30, 2020.
- Additional availability: Up to $15.0 million through March 15, 2021, subject to customary conditions; an additional $10.0 million may be available through March 15, 2022, subject to performance milestones and other conditions.
- Interest rate: The greater of 8.85% annually or 5.60% plus the Wall Street Journal prime rate.
- Repayment: Interest-only payments initially, with principal payments beginning November 1, 2022, or May 1, 2023 if specified performance milestones are achieved. Scheduled maturity is October 1, 2024.
- Fees: A $200,000 facility charge was paid at closing. An end-of-term charge equal to 5.0% of principal repaid is payable at maturity or repayment, subject to a minimum aggregate charge of $1.5 million.
- Collateral: Substantially all personal property and other assets of the borrowers, excluding intellectual property.
- Prepayment: Permitted for amounts greater than $5.0 million, subject to premiums ranging from 2.0% in the first year to 1.0% after the second year and before maturity.
Changes, Outlook, and Risks
The filing creates a new secured debt obligation and provides additional liquidity of $15.0 million immediately, with potential access to up to $25.0 million more if specified conditions and milestones are satisfied. The filing does not provide revenue, profit, cash-flow, margin, or existing-debt balances for the reporting period.
- The agreement contains affirmative and restrictive covenants, including limitations on indebtedness, liens, investments, distributions, transfers, mergers, acquisitions, and corporate changes.
- The company must comply with financial reporting obligations and a covenant restricting a change in control.
- Events of default include payment or covenant defaults, certain material-adverse-effect events, cross-acceleration, and bankruptcy or insolvency events.
- Upon default, interest may increase by an additional 5.0%, and Hercules may accelerate all outstanding obligations and exercise other remedies.
- Hercules has the right to invest up to $2.0 million in certain future financings producing at least $10.0 million of aggregate proceeds.
Key Facts to Verify
- Whether the company drew any additional term-loan tranches after the September 30, 2020 closing.
- Whether the specified performance milestones were achieved, extending the interest-only period to May 1, 2023.
- The loan’s effective interest expense, carrying value, and end-of-term charge in subsequent financial statements.
- Compliance with the agreement’s covenants and whether any defaults, waivers, or amendments occurred.
- The company’s cash balance, operating cash burn, and ability to repay or refinance the facility before the October 1, 2024 maturity date.