PhaseRx, Inc. (NASDAQ:PZRX) Files An 8-K Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet ArrangementItem 2.04. Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
On January 24, 2018, PhaseRx, Inc. (the “Company”) received a notice of occurrence of an event of default and a termination declaration (the “Notice”) from its senior secured lender Hercules Capital, Inc. (“Hercules”). Hercules is a party to loan and security agreement, dated June 7, 2016 (the “Loan Agreement”) by and among the Company, the several banks and other financial institutions or entities from time to time parties to the Loan Agreement (the “Lenders”) and Hercules, in its capacity as administrative agent for itself and the Lenders, to which the Lenders funded $6 million to the Company (the “Term Loan”). The Term Loan is secured by substantially all of the Company’s assets other than our intellectual property.
As previously disclosed, On December 11, 2017, the Company filed a voluntary petition (the “Proceeding”) under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware (Case No. 17-12890). On January 3, 2018, the Bankruptcy Court approved the Final Cash Collateral Order (the “Order”) in the Proceeding authorizing the Company to use Hercules’ cash collateral. to the Order, the Notice constitutes notice of the occurrence of an event of default and a termination declaration for the Company’s failure to satisfy a sale milestone set forth in the Order, namely the failure to receive a “Qualified Bid” for payment in full to Hercules by January 22, 2018. Further, to the Order, as of January 30, 2018 at 12:00 a.m., the Company’s right to use cash collateral is terminated, the automatic stay to Section 362 of the Bankruptcy Code is automatically terminated and Hercules is entitled to exercise any and all remedies set forth in the Order, which includes sweeping all of the Company’s available cash, without further order of the Bankruptcy Court.
According to the proof of claim filed by Hercules in the Proceeding, as of December 11, 2017, the outstanding balance of the Hercules Term Loan was $5,156,007.53, plus accrued and unpaid interest, indemnification obligations, fees, costs and expenses.
About PhaseRx, Inc. (NASDAQ:PZRX)
PhaseRx, Inc is a biopharmaceutical company developing a portfolio of mRNA products to correct life-threatening inherited liver diseases in children. The Company’s initial product development focus is on urea cycle disorders, a group of rare genetic diseases that generally present before the age of 12 and are characterized by the body’s inability to remove ammonia from the blood. The Company’s i-ERT approach is enabled by its Hybrid mRNA Technology platform and is applicable to a number of inherited liver diseases. The Company is headquartered in Seattle.