Arrowhead can keep more revenue. Its new interest bill comes in cash.
The $400 million refinancing removes required repayments from product and licensing receipts. It also changes how the company pays for its borrowing.
Arrowhead Pharmaceuticals has refinanced its debt to remove automatic repayments from product and licensing receipts. The deal also replaces interest that accumulated in the loan with an interest bill payable in cash each quarter.
The new facility provides $400 million of fully funded principal. Arrowhead paid approximately $404.4 million to retire the old loan, whose principal including accrued payment-in-kind interest was approximately $363.8 million. The company says the payoff was about $68 million below the amount otherwise required by the old minimum-return provisions.
Interest now draws on cash
The old facility carried 15% interest paid in kind, meaning interest increased the amount owed. For the new loan, one rate option uses the Secured Overnight Financing Rate, or SOFR, plus 5.50 percentage points. The SOFR calculation uses a minimum benchmark of 1%. Interest is payable quarterly in cash.
The lender fee is 2% of the new principal. All principal comes due on November 2, 2031, with no scheduled installments before then. Early repayment can still carry a premium.
The refinancing also removes requirements to direct part of product sales, royalties, milestones, licensing or partnership proceeds, and pipeline-asset monetizations toward repaying the loan. That lets Arrowhead retain more of those receipts for its business. Specified insurance and condemnation proceeds and borrowing outside the permitted debt terms can still require early repayment.
The required minimum falls to $125 million from $150 million, held as cash and equivalents in qualifying U.S. accounts subject to the lenders' first-priority security interest. The facility remains secured by substantially all assets of the borrowers, including intellectual property.
The latest accounts predate the refinancing
Arrowhead's latest reported quarter ended June 30. It generated $75.3 million of revenue and recorded a $194.3 million net loss. Collaboration and licensing payments make revenue dependent on the timing of agreements and milestones.
At June-end, its reported company cash resources totaled approximately $1.567 billion, mainly securities. Cash held by a separate group entity was reported outside that measure. Operating activities used $79.5 million over the first nine months of the fiscal year.
Arrowhead plans to file the full loan agreement with the report for the quarter ending December 31, 2026. The Arrowhead company profile keeps the June financial snapshot separate from the November transaction.