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news.Somaxon Pharmaceuticals has signed a $15 million secured loan agreement with Oxford Finance and Silicon Valley Bank and a committed equity financing facility with Kingsbridge Capital in which Kingsbridge has committed to provide up to $50 million of capital through the purchase of newly-issued shares of Somaxon's common stock.
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Under the secured loan agreement, Somaxon borrowed $15 million from the lenders. The loan is secured by a first priority security interest in all of the company’s assets, other than its intellectual property and its rights under license agreements granting it rights to intellectual property. Somaxon also agreed not to pledge or otherwise encumber its intellectual property assets.
Somaxon will be required to pay interest on borrowings at the fixed, per-annum rate of 9.57% on a monthly basis through December 31, 2008. Thereafter, the company will be required to repay the principal plus interest in 30 equal monthly installments.
Under the terms of the committed equity financing facility (CEFF), the maximum number of shares that Somaxon may sell (exclusive of the shares underlying a warrant issued concurrently to Kingsbridge with the CEFF) will be limited to the maximum number of shares the company may sell under the rules of the Nasdaq global market without approval of its stockholders.
Subject to certain conditions, Somaxon may access capital under the CEFF in tranches of up to three percent of the company’s market capitalization at the time of the draw down of such tranche. Throughout the term of the agreement, Kingsbridge is restricted from engaging in any short selling transaction relating to Somaxon’s common stock.