SEATTLE and VANCOUVER, British Columbia - Achieve Life Sciences, Inc. (NASDAQ: NASDAQ:ACHV), a pharmaceutical company focused on developing cytisinicline for smoking cessation, has entered into a $20 million debt refinancing agreement with Silicon Valley Bank (SVB). The new loan refinancing extends the maturity of their existing debt facility from August 1, 2024, to December 1, 2027.
John Bencich, CEO of Achieve Life Sciences, expressed confidence in the ongoing partnership with SVB and the potential of cytisinicline to address nicotine addiction. The refinancing is expected to lower the company's cost of capital, extend its cash runway, and provide additional capital to support the regulatory approval process of cytisinicline with the FDA.
The agreement details a three-tranche $20 million term loan facility. The first tranche of $10 million has been received at loan closing. The second tranche of $5 million will be available upon FDA acceptance of the New Drug Application (NDA) for cytisinicline, while the final $5 million tranche is subject to SVB's credit committee approval and discretion.
Interest on the principal will accrue at a floating rate of the greater of 7.0% or the prime rate minus 1.0%. An interest-only period is set through December 31, 2025, followed by 24 monthly payments of principal plus interest until maturity. The agreement also includes provisions for potential conversion of debt into common stock at SVB's election, under certain conditions.
Achieve Life Sciences is committed to addressing the global smoking health epidemic and nicotine addiction through the development of cytisinicline. The company aims to provide a new treatment option for the estimated 28 million adults in the United States who smoke and the over 11 million who use e-cigarettes.
Cytisinicline is a plant-based alkaloid that is believed to help in treating nicotine addiction by interacting with nicotine receptors in the brain, thus reducing withdrawal symptoms and the satisfaction associated with nicotine products. The investigational product candidate has not yet been approved by the FDA.
The financial terms of the refinancing are available in the company's Form 8-K filing dated July 29, 2024. This news article is based on a press release statement issued by Achieve Life Sciences.
In other recent news, Achieve Life Sciences has been involved in negotiations to refinance its existing loans with Silicon Valley Bank. The proposed terms outline a loan facility of up to $20 million, extending the maturity date to June 1, 2028. In other developments, the biopharmaceutical company's cytisinicline showed promising results in a vaping cessation trial, indicating an increased chance of quitting compared to a placebo.
The company also experienced a revision in its stock outlook as Oppenheimer reduced the price target from $18 to $11, while maintaining an Outperform rating. This change followed a slight miss in the company's earnings per share report. Despite the adjustment, the focus remains on Achieve Life Sciences' smoking cessation program, particularly the upcoming ORCA OL study.
During their first quarter 2024 earnings call, Achieve Life Sciences reported significant progress on the cytisinicline trials. The company has reached an agreement with the FDA on the requirements for the New Drug Application filing and secured financing of up to $124 million for the ORCA-OL trial.
Positive outcomes from the Phase 2 ORCA-V1 trial were published, with plans to discuss label expansion with the FDA. The company expects to begin enrollment for the ORCA-OL study soon, with 29 clinical sites ready to participate.
InvestingPro Insights
Achieve Life Sciences, Inc. (NASDAQ: ACHV) has recently shown a commitment to financial stability by entering into a strategic debt refinancing agreement with Silicon Valley Bank. This move is underpinned by the company's financial metrics and market performance. According to InvestingPro data, Achieve Life Sciences holds a market capitalization of $169.13 million. The company's price-to-earnings (P/E) ratio stands at -3.89, reflecting investor sentiment about its future profitability.
InvestingPro Tips reveal a mixed financial outlook for Achieve Life Sciences. On the positive side, the company holds more cash than debt on its balance sheet and has liquid assets that exceed its short-term obligations, which may provide some financial flexibility in the near term.
Still, the company is not currently profitable, with a reported operating income of -$24.65 million over the last twelve months as of Q1 2024, and analysts do not anticipate it will become profitable this year. Additionally, the company's stock price movements have been quite volatile, which could be a point of consideration for potential investors.
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