Hankmanhub, Thanks for the feedback. I accidentally omitted “10% original issue discount” and hereby insert it into the sentence: “Even recent financing confirms this resilience, as in the Streeterville debt financing, with straight interest, 10% original issue discount, no warrants, and no “vulture” debt financing terms”.
My intent was to contrast this type of institutional term loan vs a truly "vulture" financing. A 10% discount is a standard, fixed cost of borrowing term for a pre-revenue, high risk biotech company securing a non-dilutive loan. It is another way lenders use to express charging interest expense. So in my mind, I grouped it with the straight interest, which it technically is not, so I acknowledge the correction.
But to be crystal clear, the OID is not a vulture financing term.
Given the tone of your response, I don’t want readers to misunderstand the difference between a high-cost loan and a high-sabotage loan, so here’s a quick comparison just on key terms:
Standard terms for a pre-revenue biotech
- Total interest = fixed face interest + fixed upfront discount/fees
- Warrants, typically 5% to 15% of loan amount (some dilution)
- Conversion to shares – not mandatory
- Sabotage mechanism - none
NWBO’s actual terms
- Total interest = fixed 8% face interest + 10% discount/fees
- No warrants (non-dilutive)
- Conversion to shares - none
- Sabotage mechanism - none
Vulture lending terms
- Total interest = variable/very high interest
- Massive warrant coverage (20%+)
- Conversion to shares – Lender’s option
- Sabotage conversion mechanism - full-ratchet anti-dilution (a trojan horse term that guarantees dilution and enables stock manipulation)
The fact that NWBO successfully secured financing with no warrants and no sabotage terms is the definition of resilience.
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