Verrica Pharmaceuticals (NASDAQ:VRCA) shares are tanking today after the dermatology therapeutics company entered into a non-binding term sheet for a $125 million term loan facility.
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The five-year facility will mature in July 2028, and Verrica plans to tap $50 million immediately upon the closing of the transaction. Additional capital, based on certain revenue milestones, will be available to the company in tranches.
Moreover, the term sheet also includes a potential issue of a warrant to the lender for acquiring $3.1 million worth of Verrica shares.
Interestingly, the move comes fresh on the heels of Verrica’s Ycanth topical solution bagging approval from the U.S. Food and Drug Administration for the treatment of molluscum contagiosum. The approval is backed by positive results from two Phase 3 trials, and the therapy is expected to be commercially available by September this year.
Molluscum is a contagious viral skin disease that impacts nearly six million people in the U.S. alone. Overall, the Street has a $11 consensus price target on Verrica alongside a Moderate Buy consensus rating.
Despite today’s price drop, Verrica shares are still up nearly 135.2% over the past year.
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