NATICK, Mass. - Allurion Technologies, Inc. (NYSE: ALUR), a medical technology company focused on obesity treatment, has announced the successful closing of a $48 million convertible senior secured note financing deal with RTW Investments, LP entities.
The funding is primarily aimed at simplifying Allurion's capital structure by allowing the company to repay its existing term loan with Fortress Credit Corp. This strategic financial move is expected to reduce Allurion's annual interest expense and enhance its operational flexibility.
The newly acquired funds will also extend Allurion's cash runway as it awaits the outcome of the AUDACITY FDA trial, which is anticipated by the end of the year. The convertible notes carry a 6% annual interest rate with an extended maturity date set for April 2031, almost four years beyond the original term loan's maturity. The terms of the agreement permit Allurion to make interest payments in kind for the first three years, providing additional financial leeway.
Dr. Shantanu Gaur, Founder and CEO of Allurion, expressed confidence in the company's clinical results and growth, highlighting the strengthened partnership with RTW Investments as a testament to the shared belief in Allurion's long-term potential.
Roderick Wong, M.D., Managing Partner and Chief Investment Officer of RTW Investments, echoed this sentiment, emphasizing their anticipation for the U.S. FDA trial results of Allurion's weight loss program.
Allurion's program includes the Allurion Gastric Balloon, a non-surgical intragastric balloon for weight loss, and a comprehensive virtual care suite. The financing agreement also includes customary registration rights for the shares of common stock that may be issued upon conversion of the notes.
This financial development is based on a press release statement and is intended to provide investors with information regarding Allurion's strategic actions to strengthen its financial position ahead of key clinical milestones.
The company's securities are not being offered for sale in this announcement, and the full details of the note purchase agreement will be filed with the U.S. Securities and Exchange Commission, accessible on the SEC's website.
InvestingPro Insights
Allurion Technologies, Inc. (NYSE: ALUR) has recently made a significant move to streamline its financial structure, which may be of interest to investors monitoring the company's performance and future prospects.
According to InvestingPro data, Allurion has a market capitalization of approximately $112.93 million, reflecting the market's current valuation of the company. Despite an impressive gross profit margin of 77.61% for the last twelve months as of Q4 2023, the company's revenue has decreased by 16.73% over the same period.
Moreover, Allurion's stock price has experienced considerable volatility, with a 67.96% decline in the one-year price total return as of early April 2024. This could be indicative of the market's reaction to the company's financial performance and the risks associated with its ongoing FDA trial. InvestingPro Tips highlight that Allurion is quickly burning through cash and analysts do not anticipate the company to be profitable this year, which may be crucial considerations for investors.
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With the recent financing deal aimed at reducing annual interest expenses and improving operational flexibility, Allurion's strategic decisions are certainly reshaping its financial landscape. The outcome of the AUDACITY FDA trial remains a pivotal event that could influence the company's trajectory and investor sentiment significantly.
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