Eloxx Pharmaceuticals (OTC:ELOX), Inc., a biopharmaceutical company, has entered into a Sixth Amendment to its Loan and Security Agreement with Hercules Capital (NYSE:HTGC), Inc. and other lenders, securing an additional $3.175 million in funding. This amendment, signed on July 10, 2024, also includes provisions for a potential conversion of debt to equity in the event of a qualified financing.
The company, which operates under the industrial classification of Biological Products, announced the amendment to the agreement initially dated September 30, 2021. This new tranche of funding, referred to as the Tranche 2 Advance, was disbursed in multiple payments between July 5 and July 15, 2024. It also includes a Bridge Loan Advance of $288,000 provided by Domicilium Fund III LP on May 31, 2024.
According to the terms, lenders have the option to convert the debt from the Tranche 1A and Tranche 1B Advances into shares of the company's stock in the event of a qualified financing of at least $7 million before April 1, 2025. Additionally, mandatory conversion of the Bridge Loan Advance and a portion of the Tranche 2 Advance into company stock will occur if a qualified financing is secured by the Term Loan Maturity Date.
As part of the agreement, Eloxx Pharmaceuticals has committed to a Royalty and Revenue Sharing Agreement with Domicilium. The company will pay a portion of milestone payments and a percentage of net sales related to its ELX-02 compound and any other products derived from it, with the total payments capped at $53 million. These payments will serve as repayment for the loans, including accrued interest.
Furthermore, the company has amended its Securities Purchase Agreement to grant anti-dilution rights to SD MF in case of a dilutive issuance within 15 months of the closing date.
Eloxx's financial obligations under the amended loan agreement have been detailed in the SEC filing, which also contains forward-looking statements about the company's expectations under the new agreement and the anticipated benefits thereof.
InvestingPro Insights
Eloxx Pharmaceuticals' recent financial arrangements reflect its ongoing efforts to secure funding and manage its capital structure. The latest amendment to its Loan and Security Agreement underscores the company's need for additional capital, a narrative that is echoed in the InvestingPro Tips which highlight Eloxx's significant debt burden and its rapid cash burn. With a market capitalization of just $2.18 million and a negative price-to-earnings (P/E) ratio last reported at -0.11, the company's financial health is a concern for investors. Additionally, the stock's performance has been underwhelming, with a one-year price total return of -91.5%, suggesting that the market has reacted negatively to the company's prospects.
Investors monitoring Eloxx should note that the company does not pay dividends, which, combined with its volatile stock price movements, positions it as a higher-risk investment. For those considering a deeper analysis of Eloxx Pharmaceuticals, InvestingPro offers additional insights, including a total of 14 InvestingPro Tips that could help in making informed decisions. To access these insights and more, readers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.