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ESSA Secures $10MM Term Loan From Silicon Valley Bank

November 22, 2016, 07:22 AM
Filed Under: Pharmaceuticals

ESSA Pharma Inc., a pharmaceutical company focused on the development of small molecule drugs for the treatment of prostate cancer, announced that it has secured a US$10 million growth capital term loan facility from Silicon Valley Bank ("SVB" or the "Bank").  Under the loan and security agreement, the Company will initially draw down US$8 million and has a conditional option to receive an additional US$2 million (collectively, the "Term Loans"). The proceeds from the Term Loans will be used for the Company's future working capital needs.

"This loan facility strengthens our balance sheet as we continue to enroll patients in the Phase 1 dose escalation clinical trial of EPI-506, our product candidate for castrate resistant prostate cancer, and prepare for the Phase 2 portion of the clinical trial," said Dr. David R. Parkinson, ESSA President and Chief Executive Officer.

"ESSA is driving important advancements in the treatment of prostate cancer," said Michael White, Managing Director at Silicon Valley Bank. "We look forward to supporting ESSA's clinical development of a new therapeutic for prostate cancer. Our goal is to provide the ESSA team with the right financing, connections and global services to facilitate their continued success."

Coupled with existing cash resources, the proceeds from the Term Loans are expected to provide ESSA with sufficient cash to (i) complete EPI-506's Phase 1 clinical study, (ii) trigger a US$5.4 million grant under the Cancer Prevention Research Institute of Texas ("CPRIT") program at completion of the Phase 1 clinical study and (iii) commence EPI-506's Phase 2 portion of the clinical study.

Under the terms of the loan agreement entered into with SVB (the "Loan Agreement"), the total proceeds of $10 million will be available in two tranches, $8 million upon closing, and$2 million at the discretion of the Company from December 1, 2016 until April 28, 2017 and upon positive Phase I data for EPI-506 and receipt of the $5.4 million grant under the CPRIT program.  The Term Loans bear an interest rate of Wall Street Journal Prime Rate plus 3.0% annually and will mature on September 1, 2020.  The Loan Agreement requires ESSA to expense a final payment of 8.6% of the amount advanced under the Term Loans, due upon the earlier of the maturity or termination of the Term Loan facility.  The Term Loans will be secured by perfected first priority lien on all the Company's assets, with a negative pledge on intellectual property.  The Term Loans are subject to standard events of default, including default in the event of a material adverse change. There are no financial covenants.

ESSA is a clinical-stage pharmaceutical company focused on developing novel and proprietary therapies for the treatment of castration resistant prostate cancer ("CRPC") in patients whose disease is progressing despite treatment with current therapies. ESSA believes that its product candidate, EPI-506, can significantly expand the interval of time in which patients suffering from CRPC can benefit from hormone-based therapies. EPI-506 acts by disrupting the androgen receptor ("AR") signaling pathway, which is the primary pathway that drives prostate cancer growth.

For more than 30 years, Silicon Valley Bank has helped innovative companies and their investors move bold ideas forward, fast. SVB provides targeted financial services and expertise through its offices in innovation centers around the world. With commercial, international and private banking services, SVB helps address the unique needs of innovators.

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