Paratek Pharmaceuticals on Jan. 4 announced a $60 million non-recourse loan agreement with an affiliate of R-Bridge Healthcare Investment Advisory. Shares of the biopharma company lost 1.9% at the close on Monday.
The net proceeds of the loan, along with cash on hand, will be used to prepay the outstanding obligations under Paratek’s (PRTK) amended and restated loan and security agreement with Hercules Capital. The loan has a maturity of 12 years from the date of execution.
The loan will be repaid using proceeds of royalties from the company’s license and collaboration agreement with Zai Lab (Shanghai) Co., (Zai Lab) and a 2.5% revenue interest from the company’s US net sales of NUZYRA with an annual cap of $10 million.
In reaction to the company’s Q3 results, H.C. Wainwright analyst Ed Arce on Nov. 9 raised the stock’s price target to $22 from $19 and reiterated a Buy rating.
The new price target of $22 implies 258% upside potential to current levels.
“Overall, we believe Paratek is on course to establishing itself as a leading, commercially successful, independent antibiotic biotech company, with a pathway to cash flow breakeven,” Arce wrote in a note to investors. ”Paratek now anticipates full year 2020 total revenue to be at the higher end of the previously communicated range of $78-83M, based on continued stronger-than-expected U.S. NUZYRA net product sales.”
“In addition, the company is also lowering its combined R&D and SG&A expense guidance again to approximately $120M, down from $135M as of 2Q20 earnings, driven by a continued focus on operational efficiencies and the timing of certain expenses driven by the COVID-19 pandemic, some of which are now expected to occur in 2021,” the analyst noted. (See PRTK stock analysis on TipRanks)