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Curis Announces Closing of $30 Million Secured Debt Financing

December 14, 2012, 07:30 AM

Curis, Inc. a drug development company seeking to develop next generation targeted small molecule drug candidates for cancer treatment, closed the previously announced $30 million debt transaction with BioPharma Secured Debt Fund II Sub, an investment fund managed by Pharmakon Advisors. The debt is secured with certain future royalties of Erivedge, the first and only FDA-approved medicine for people with advanced basal cell carcinoma and is developed and marketed by Genentech, a member of the Roche Group.

As part of the transaction, Curis formed a wholly-owned subsidiary called Curis Royalty LLC ("Curis Royalty"), which entered into a credit agreement with BioPharma-II, whereby Curis Royalty borrowed $30 million at an annual interest rate of 12.25% (the "loan"). Under the terms of the closing of the loan transaction, Curis transferred to Curis Royalty the right to receive royalty and certain other royalty-related payments from the commercial sales of Erivedge under Curis' collaboration agreement with Genentech.

The royalty payments that Curis Royalty will be entitled to receive under the collaboration agreement with Genentech will be the source of funds to repay principal of and interest on the loan. The final maturity date of the loan will be the earlier of the date when principal is paid in full and the termination of Curis Royalty's right to receive royalties under the collaboration agreement with Genentech. The loan is secured by a security interest granted by Curis Royalty in its rights to receive royalty and other royalty-related payments under the collaboration agreement with Genentech. The loan constitutes an obligation of Curis Royalty, and is intended to be non-recourse to Curis.

Under the terms of the loan, quarterly royalty payments from Genentech will first be applied to cover Curis' royalty obligations to academic institutions and Curis Royalty's ongoing expenses. Remaining amounts, subject to caps of $1.0 million per quarter in 2013, $2.0 million per quarter in 2014 and $3.0 million per quarter in 2015, will be applied to pay interest and principal on the loan. Curis Royalty will be entitled to receive and distribute to Curis the remaining amounts above the caps, if any. Curis Royalty remains entitled to receive any royalty payments related to sales of Erivedge following repayment of the loan.

Curis is a drug development company committed to leveraging its innovative signaling pathway drug technologies to seek to create new targeted small molecule drug candidates for cancer. Curis is building upon its previous experiences in targeting signaling pathways, including in the Hedgehog pathway, in its effort to develop proprietary targeted cancer programs.

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