aibioMoonLake draws $75.0 million of Hercules Capital loan facility of up to $500.0 million
Tickers MLTX
MoonLake's subsidiary, MoonLake Immunotherapeutics AG, borrowed the first tranche on March 31, 2025. Most further tranches depend on trial and FDA milestones, and the facility matures April 1, 2030.
Key facts
- Company
- MoonLake Immunotherapeutics (NASDAQ: MLTX)
- News type
- Debt Financing
- Primary source
- MoonLake Immunotherapeutics Form 8-K filed April 3, 2025 (SEC EDGAR)
MoonLake Immunotherapeutics (Nasdaq: MLTX) entered into a loan and security agreement with Hercules Capital, Inc. that provides a term loan facility of up to $500.0 million, according to a Form 8-K filed April 3, 2025. The first tranche of $75.0 million was fully funded on March 31, 2025. The 8-K calls it a non-dilutive term loan facility, and the press release says it provides capital with no dilution to shareholders.
The loan structure
MoonLake Immunotherapeutics, the parent company, signed as a guarantor. Its subsidiary, MoonLake Immunotherapeutics AG, is the borrower. Hercules Capital, Inc. is administrative agent and collateral agent for itself and the other lenders. The filing says $300.0 million of the facility is fully committed, subject to the achievement of milestones.
The facility has five tranches. The first is the $75.0 million of term loans funded at closing. The others depend on events:
The second tranche is up to $125.0 million, available at the company's option once it announces that the VELA-1 and VELA-2 Phase 3 studies of sonelokimab in adults with moderate to severe hidradenitis suppurativa each met their primary endpoint with an acceptable safety profile. The third is up to $50.0 million, tied to the same kind of announcement for the IZAR-1 and IZAR-2 Phase 3 studies in active psoriatic arthritis. The fourth is up to $50.0 million and requires the third milestone plus FDA acceptance of a biologics license application for sonelokimab. The fifth, of up to $200.0 million, is subject to approval by the lenders in their discretion.
Interest, maturity and repayment
The facility matures on April 1, 2030. It bears interest at an annual rate equal to the greater of the prime rate reported in The Wall Street Journal plus 1.45% and 8.45%. The rate drops by 0.25% when the FDA accepts a biologics license application for sonelokimab.
There are no scheduled amortization payments, so all principal is due on the maturity date. MoonLake may prepay the loans at any time. A prepayment premium ranges from 2.0% to 0.0%, and an end of term charge ranges from 6.95% to 4.25%, depending on when prepayment occurs. The premium is waived if the facility is repaid in full because of a change of control.
The company may use the proceeds for working capital and general corporate purposes.
Security and covenants
All obligations are secured on a first-priority basis, subject to certain exceptions, by security interests in substantially all assets of the company and its material subsidiaries, including intellectual property. Material subsidiaries, including foreign subsidiaries, will guarantee the loans, subject to certain exceptions.
The agreement contains customary covenants, including a liquidity covenant, and negative covenants that restrict indebtedness, liens, investments, asset sales, licensing and royalty transactions and dividends. Events of default include payment defaults, covenant defaults, bankruptcy and insolvency proceedings, judgments and change of control, after which the loans may become due immediately. The agreement will be filed as an exhibit to the company's quarterly report for the quarter ending March 31, 2025.
The press release and the company
In its press release, MoonLake said the facility adds to the $448 million cash position disclosed in its previously filed 10-K. The company plans a Capital Markets Update on Tuesday, April 29, 2025 in New York. Leerink Partners served as exclusive financial advisor to MoonLake. Gibson, Dunn & Crutcher LLP and Kellerhals Carrard were legal counsel to the company, and DLA Piper LLP and Schellenberg Wittmer were legal counsel to Hercules Capital.
In its Form 10-K filed February 26, 2025, MoonLake described itself as a clinical stage biotechnology company and a single asset company focused on sonelokimab, a tri-specific IL-17A and IL-17F inhibiting Nanobody. It said it expected primary endpoint data from VELA-1 and VELA-2 as of mid-2025. The same 10-K shows a net loss of $121,244,400 for 2024, against $44,079,117 for 2023, so the debt arrives while losses are widening and the single drug's pivotal results are still pending. Matthias Bodenstedt, Chief Financial Officer, signed the 8-K.