It is a common phenomenon for small pharma/bio-pharma companies to enter into loan agreements with financial institutes or other larger companies to enhance their development programs. Earlier this week, Acura Pharmaceuticals, Inc. (ACUR), a specialty pharmaceutical company, confirmed a $10 million debt financing from Oxford Finance LLC. The loan amount will bear a fixed interest rate of 8.35% per annum.
Acura will make the interest only payment for the first 15 months and thereafter will repay the entire principal amount and interest by Dec 1, 2018. Additionally, Acura will make a one-time interest payment of $795,000 at the time of maturity or prior termination. The company intends to utilize the loan amount primarily for fulfiling its business requirements including its pipeline development.
We note that Acura’s pipeline is being developed using its proprietary AVERSION and IMPEDE technologies. Management further stated in its press release that a certain amount from the debt financing will be utilized to expand the company’s Nexafed franchise, which was launched in Dec 2012.
Nexafed is an immediate-release, next-generation pseudoephedrine tablet which combines effective nasal congestion relief with IMPEDE technology that disrupts the conversion of pseudoephedrine into the dangerous methamphetamine. The drug also meets a key human clinical efficacy standard of the U.S. Food and Drug Administration (FDA).
In Sep 2013, Acura reported that Nexafed was being sold in more than 2,600 U.S. pharmacies. The company also reported that the drug has become the standard of care in many of these pharmacies.
Acura also has Oxecta in its portfolio. Oxecta incorporates the AVERSION technology and is approved to manage the acute and chronic moderate to severe pain where the use of an opioid analgesic is appropriate.
Acura currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Jazz Pharmaceuticals (JAZZ), Lannett Company, Inc. (LCI) and Forest Laboratories Inc. (FRX). All the stocks carry a Zacks Rank #1 (Strong Buy).
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