Today Fennec (FENC) announced a $12.5 million senior loan with the Life Sciences Group at Bridge Bank. The loan will have a maturity date of October 1, 2023, which will be approximately 3 years after the potential approval of Fennec’s drug, Pedmark. Fennec will have access to the funds upon FDA approval of Pedmark. In a base case scenario, we think Fennec will be able to repay the loan by 2023.
Fennec will use the proceeds from the loan for working capital for commercialization of Pedmark. We’re waiting on the company to file an 8K of the loan agreement to read into the details of the transaction.
Loan Gives Fennec Viable Plan B
With the additional $12.5M loan, Fennec will have sufficient capital to launch commercial efforts for Pedmark, even though we still do not think this is Plan A. The added capital gives Fennec a viable alternative in case a potential acquisition does not come along.
The company’s cash position can now help in M&A negations, which we believe will likely start sometime in 2H 2019. Around the same time that the FDA may approve Pedmark and Fennec is able to draw on the loan.
Overall, the non-dilutive financing was a positive for Fennec. The company is well financed to commercialize Pedmark, if needed. We still believe a takeout is likely post-NDA submission and that patience will pay off for investors.
PropThink contributors are LONG FENC
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