| Item 1.01. | Entry into a Material Definitive Agreement. |
On September 21, 2022 (the “Closing Date”), Spectrum Pharmaceuticals, Inc. (the “Company”) entered into a Loan and Security Agreement (the “Loan and Security Agreement”), by and among the Company, Allos Therapeutics, Inc., Talon Therapeutics, Inc., and Spectrum Pharmaceuticals International Holdings, LLC, as borrowers (together with the Company, collectively, the “Borrowers”), the lenders from time to time party thereto (the “Lenders”), and SLR Investment Corp., in its capacity as collateral agent for the Lenders (in such capacity, the “Agent”). The Loan and Security Agreement establishes a $65.0 million term loan facility, consisting of (i) $30.0 million (the “Term A Loan”) funded on the Closing Date, (ii) $10.0 million (the “Term B Loan”) that the Company may borrow on or prior to December 20, 2022; provided that the Company has received approval by the U.S. Food and Drug Administration (“FDA”) for its new drug application for poziotinib for non-small cell lung cancer (NSCLC) in previously treated patients with HER2 exon 20 insertion mutations, (iii) $15.0 million (the “Term C Loan”) that the Company may borrow on or prior to May 15, 2023; provided that the Company and its subsidiaries have achieved certain product revenue milestone targets described in the Loan and Security Agreement and (iv) $10.0 million (the “Term D Loan” and, together with the Term A Loan, the Term B Loan and the Term C Loan, collectively, the “Term Loan”) that the Company may borrow on or prior to November 15, 2023; provided that the Company and its subsidiaries have achieved certain product revenue milestone targets described in the Loan and Security Agreement. The Term Loan has a maturity date of September 1, 2027 (the “Maturity Date”).
Borrowings under the Term Loan will bear interest at a rate per annum equal to one-month term SOFR (subject to a 2.30% floor), plus 5.70%, payable monthly in arrears. The Company is permitted to make interest-only payments on the Term Loan through September 30, 2025, which may be extended at the Company’s option to September 30, 2026; provided that the Company meets certain financial milestones described in the Loan and Security Agreement. Accordingly, beginning on October 1, 2025 or October 1, 2026 (as applicable), the Company will be required to make monthly payments of interest, plus repay the Term Loan in consecutive equal monthly installments of principal. The Company is obligated to pay the Lenders a non-refundable facility fee in the amount of 1.0% of each Term Loan that is funded. In addition, the Company is obligated to pay a final fee equal to 4.75% of the aggregate amount of the Term Loan funded, such final fee to be due and payable upon the earliest to occur of (1) the Maturity Date, (2) the acceleration of the Term Loan, and (3) the prepayment of the Term Loan. The Company may voluntarily prepay the outstanding Term Loan, subject to a prepayment premium of (i) 3.0% of the principal amount of the Term Loan, if prepaid prior to or on the first anniversary of the Closing Date, (ii) 2.0% of the principal amount of the Term Loan, if prepaid after the first anniversary of the Closing Date through and including the second anniversary of the Closing Date, or (iii) 1.0% of the principal amount of the Term Loan if prepaid after the second anniversary of the Closing Date and prior to the Maturity Date. Concurrently with the funding of each tranche of the Term Loan, the Company is required to issue to each Lender of such Term Loan a warrant to purchase a number of shares of the Company’s common stock in an amount equal to 1.00% of the Term Loan funded, divided by the exercise price (collectively, the “Warrants”). The exercise price will be the lesser of (a) the 10-day trailing average of the Company’s common stock price, as determined as of the close of business on the day immediately prior to the funding date of the applicable Term Loan and (b) the Company’s common stock price, as determined as of the close of business on the business day immediately prior to the funding date of the applicable Term Loan. The Warrants are immediately exercisable, and the exercise period will expire 10 years from the date of issuance.
The Company’s obligations under the Loan and Security Agreement and the other Loan Documents (as defined in the Loan and Security Agreement) are guaranteed by the other Borrowers and any other subsidiaries of the Company that become Guarantors (as defined in the Loan and Security Agreement). The Borrowers’ and the Guarantors’ (collectively, the “Loan Parties”) respective obligations under the Loan and Security Agreement and the other Loan Documents are secured by first priority security interests in substantially all assets of the Loan Parties, subject to certain customary thresholds and exceptions.
