Verrica enters non-binding term sheet for up to $125M debt financing

Verrica Pharmaceuticals has entered into a non-binding term sheet for a term loan facility of up to $125 million, which the Company expects to close by the end of this week. Under the terms of the term sheet, Verrica intends to borrow $50 million immediately following the close of the transaction, with additional capital available in tranches based on the achievement of certain revenue milestones. The facility is a five-year term loan that matures in July 2028. The term loan will bear interest at a rate based upon the secured overnight financing rate, subject to a SOFR floor of 4%, in addition to a margin of 8% per annum. The Term Sheet also contemplates the issuance to the lender of a warrant to purchase $3.1 million of the Company’s common stock, with an exercise price equivalent to the trailing 10-day volume weight average price of the common stock. Upon close of the transaction, Verrica expects the $50 million upfront, plus the $60 million in cash and cash equivalents on-hand as of March 31, 2023, to extend the Company’s cash runway into the first quarter of 2025. The term sheet does not represent a definitive loan agreement and there is no guarantee that the Company will enter into a definitive loan agreement, close the proposed loan facility with the lender or borrow any funds pursuant to the loan facility. Later this morning, the Company will host a conference call and webcast at 8:30 a.m. ET to discuss the U.S. Food and Drug Administration approval of YCANTH topical solution for the treatment of molluscum contagiosum in adult and pediatric patients 2 years of age and older.