Horizon Technology Finance Corporation has provided a $25 million debt facility to Stealth BioTherapeutics. Based in Massachusetts, Stealth is a provider of novel therapies for diseases involving mitochondrial dysfunction.
BOSTON, Oct. 4, 2021 /PRNewswire/ — Stealth BioTherapeutics Corp (Nasdaq: MITO), a clinical-stage biotechnology company focused on the discovery, development, and commercialization of novel therapies for diseases involving mitochondrial dysfunction, today announced completion of a $25 million long-term debt facility led by Horizon Technology Finance Corporation (Nasdaq: HRZN) (“Horizon”). Stealth has drawn down $15 million under the facility with an additional $10 million available upon achievement of a predetermined milestone.
“We are pleased to partner with Horizon to address our funding needs in a manner that balances our near-term capital requirements with our sensitivity to shareholder dilution,” said Reenie McCarthy, Chief Executive Officer. “This transaction strengthens and extends our financial resources as we plan to initiate several new clinical trials in the coming months, progress our commercial planning for Barth syndrome, for which we have recently submitted an NDA that is subject to FDA review, and prepare for Phase 2 data readout in extra-foveal geographic atrophy associated with dry AMD.”
Gerald A. Michaud, President of Horizon stated, “We are delighted to provide this financing that will enable Stealth to advance its development of novel therapies for rare and common diseases of mitochondrial dysfunction for which there are no approved treatments. This investment in Stealth provides another example of our ability to finance life sciences companies through multiple stages of development and through various value inflection points.”
Fifteen million dollars of the $25 million facility was funded upon closing and $5.7 million of which was utilized to payoff Stealth’s existing term loan with Hercules Capital. The additional $10 million available under the facility may be funded upon Stealth achieving a predetermined milestone. Each advance under the debt facility will be repaid in 48 monthly payments consisting of 18 monthly payments of interest only, followed by 30 monthly payments of principal and accrued interest, and will be payable monthly in arrears. The interest-only period may be extended to 24 months contingent upon Stealth achieving certain milestones, followed by 24 monthly payments of principal and accrued interest. In connection with the financing, Stealth issued Horizon warrants to purchase up to 13,636,364 ordinary shares at an exercise price of $0.11 per share (or $1.33 per American Depository Share (“ADS”) of the Company on an ADS equivalent basis). Proceeds from the facility will be used to support the ongoing clinical development of key investigational product candidates within Stealth’s pipeline and for general working capital purposes.
We are a clinical-stage biotechnology company focused on the discovery, development, and commercialization of novel therapies for diseases involving mitochondrial dysfunction. Mitochondria, found in nearly every cell in the body, are the body’s main source of energy production and are critical for normal organ function. Dysfunctional mitochondria characterize a number of rare genetic diseases and are involved in many common age-related diseases, typically involving organ systems with high energy demands such as the heart, the eye, and the brain. We believe our lead product candidate, elamipretide, has the potential to treat both rare metabolic cardiomyopathies, such as Barth, Duchenne muscular dystrophy and Friedreich’s ataxia, rare mitochondrial diseases entailing nuclear DNA mutations, as well as ophthalmic diseases entailing mitochondrial dysfunction, such as dry age-related macular degeneration and Leber’s hereditary optic neuropathy. We are evaluating our second-generation clinical-stage candidate, SBT-272, and our new series of small molecules, SBT-550, for rare neurological disease indications following promising preclinical data. We have optimized our discovery platform to identify novel mitochondria-targeted compounds which may be nominated as therapeutic product candidates or utilized as mitochondria-targeted vectors to deliver other compounds to mitochondria.