Biotech Values

[DewDiligence]

OCRX borrows $10-20M; 4% fee payable in warrants; interest rate to be disclosed in (imminent) 8-K filing:

http://finance.yahoo.com/news/ocera-therapeutics-secures-20-million-200500648.html

Under the terms of the two-tranche loan agreement, Ocera received $10 million upon closing on July 30, 2015, with the remaining $10 million available for draw until December 31, 2016 at Ocera’s discretion, subject to the achievement of certain financial and clinical milestones.

The facility is in the form of a secured note, which is repayable in interest only installments over 18 months, with a 6 month extension upon the drawing of the second tranche. The note bears interest at a rate fixed at the funding date of each tranche. [The rate for the initial $10M will be disclosed in an imminent 8-K filing.] In addition, upon the funding of each tranche, Ocera will issue warrants to purchase shares of Ocera common stock equal to 4% of the funded amount.

Inasmuch as OCRX previously projected a year-end 2015 cash balance of $19-23M (#msg-113235511), an additional $20M (less interest payments) will cover OCRX’s cash burn for 2 years or so—i.e. beyond the likely reporting date for the STOP-HE study. In return, OCRX will have to issue 800K warrants (if the full $20M is borrowed). All told, not a bad tradeoff, IMO.