Term Loans

9 Months Ended

Sep. 30, 2025

8. Term Loans

On September 29, 2025 (the “Closing Date”), the Company and certain direct and indirect subsidiaries of the Company who may become a party thereto from time to time, as guarantors (the “Guarantors”), and ARS Pharmaceuticals Operations, Inc., as the borrower (the “Borrower” and, collectively with the Guarantors, the “Credit Parties”), entered into a credit agreement (the “Credit Agreement”) with RA Capital Agency Services, LLC (as the “Administrative Agent” and as the “Collateral Agent”), and affiliates of OMERS Administration Corporation and RA Capital Management, L.P., as lenders, and such other lenders who may become a party thereto from time to time (the “Lenders”), providing for an aggregate principal amount of up to $250.0 million of term loans from the Lenders to the Borrower (the “Term Loans”). The Term Loans will mature on September 29, 2030.

Pursuant to the terms of the Credit Agreement, the Term Loans may be advanced in four tranches. The first tranche (the “Term A Loan”) was advanced in the principal amount of $100.0 million on the Closing Date. The second tranche (the “Term B Loan”) in a principal amount of $25.0 million may be advanced at the Borrower’s election during the period commencing on the six-month anniversary of the Closing Date and ending no later than the one-year anniversary of the Closing Date, subject to customary conditions. The third tranche (the “Term C Loan” and collectively with the Term B Loan, the “Delayed Draw Term Loans”) in a principal amount of $25.0 million may be advanced at the Borrower’s election during the period commencing on and including the Closing Date and ending no later than the two-year anniversary of the Closing Date, subject to the Company achieving trailing 12-month (“TTM”) net revenues for neffy of at least $100.0 million and customary conditions. The fourth tranche (the “Term D Loan”) of up to $100.0 million is uncommitted and may be advanced at the Borrower’s election, subject to the consent of all of the Term D Lenders and customary conditions.

The Company received $100.0 million in gross cash proceeds from Term A Loan on the Closing Date, less the upfront fees taken in the form of an original issue discount and third-party fees totaling $3.8 million. The debt discount and the debt issuance costs are recorded net of the Term A Loan balance and are amortized to interest expense over the term of the debt using the effective interest rate method.

The Term Loans will initially bear interest at a per annum rate of 5.50% plus the greater of (i) the three-month forward-looking term SOFR or (ii) 3.00%, which interest rate may be reduced by 25 to 50 basis points based on achieving certain TTM net revenue milestones. The Credit Agreement provides for interest-only payments on a quarterly basis until maturity. At Borrower’s election and subject to certain conditions, 100% of accrued interest in the first two years, and 50% of accrued interest in the last three years, may be paid-in-kind, in which case the applicable interest rate for the Term Loans shall increase by 1.00% per annum for the portion of such Term Loans that is paid-in-kind. At the Closing Date and September 30, 2025, the contractual interest rate was 9.49% per annum. The Borrower may prepay the Term Loans, in whole or in part, subject to a prepayment premium and an exit fee.

The obligations of the Borrower under the Credit Agreement are guaranteed on a full and unconditional basis by the Company and the Guarantors and are secured by substantially all of the respective Credit Parties’ tangible and intangible assets and property, including intellectual property, subject to certain exceptions.

The Credit Agreement contains customary representations and warranties, covenants and events of default, including a requirement for the Borrower to maintain at all times, a minimum specified amount of unrestricted cash in deposit accounts. The Credit Agreement also includes customary events of default, including, among others, payment defaults, material misrepresentations, breaches of covenants following any applicable cure period, cross defaults with certain other indebtedness or material agreements, bankruptcy and insolvency events, judgment defaults, the occurrence of certain events that could reasonably be expected to have a “material adverse effect,” and the occurrence of a change in control (as defined in the Credit Agreement). The occurrence of an event of default could result in the acceleration of the Company’s obligations under the Credit Agreement and the exercise by the Administrative Agent of other rights and remedies provided for under the Credit Agreement. As of September 30, 2025, the Company was in compliance with all covenants under the Credit Agreement.

The Administrative Agent and Collateral Agent, as well as a Lender, are affiliates of RA Capital Management, L.P. (“RA Capital”). Affiliates of RA Capital collectively hold in excess of 10% of the Company’s outstanding common stock and are currently the Company’s largest stockholder. One of the Company’s board members is a controlling person of RA Capital’s general partner. The Lender affiliated with RA Capital holds a portion of Term Loans in the principal amount of $5.0 million.

The following table summarizes the composition of the Term Loans as reflected on the condensed consolidated balance sheet (in thousands):


	September 30, 2025
Gross proceeds	$	100,000
Unamortized debt discount and debt issuance costs		(3,771	)
Total	$	96,229

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details

ARS Pharmaceuticals, Inc. 10-Q