SECURITIES AND EXCHANGE COMMISSION
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Item 1.01. Entry into a Material Definitive Agreement.
Loan and Security Agreement
On February 4, 2022 (the “Closing Date”), Lucira Health, Inc. (the “Company”) entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules Capital, Inc. (“Hercules”), in its capacity as administrative agent and collateral agent (in such capacity, the “Agent”), and Hercules and Silicon Valley Bank (“SVB”) as lenders (collectively, the “Lenders”).
Amount. The Loan Agreement provides for term loans in an aggregate principal amount of up to $80.0 million (the “Term Loans”) available in four tranches. The tranches consist of (i) a first tranche consisting of term loans in an aggregate principal amount of $30.0 million, all of which was funded to the Company on the Closing Date (the “First Advance”), (ii) a second tranche consisting of up to an additional $20.0 million, which will become available to the Company upon request if specified conditions set forth in the Loan Agreement are met beginning on September 1, 2022 and on or prior to March 31, 2023, (iii) a third tranche consisting of an additional $15.0 million, which will become available to the Company upon request if specified conditions set forth in the Loan Agreement are met on or prior to June 15, 2023, and (iv) a fourth tranche consisting of up to an additional $15.0 million, which will be available to the Company upon request and Lender approval on or prior to March 15, 2024. The Company intends to use the proceeds of the Term Loans for working capital and general corporate purposes.
Interest Rate and Repayment. The Term Loans will mature on February 1, 2026 (the “Maturity Date”). The Term Loans bear interest at a per annum rate equal to the greater of (i) (a) 5.50% plus (b) the prime rate (as reported in the Wall Street Journal) and (ii) 8.75% (the “Interest Rate”). The Term Loans are interest only through September 1, 2024, which may be extended to February 28, 2025 if specified conditions set forth in the Loan Agreement have been met. After the interest-only period, the principal balance and related interest will be required to be repaid in equal monthly installments through the Maturity Date. The Term Loans may be prepaid in whole or in part through February 4, 2023 with payment of a 3.00% prepayment premium, thereafter through February 4, 2024 with a 2.00% prepayment premium, thereafter through February 4, 2025 with a 1.00% prepayment premium and thereafter with no prepayment premium. An additional end of term charge of 5.25% of the Term Loans advanced will be due upon prepayment or repayment.
Covenants, Representations and Warranties; Other Provisions. The Loan Agreement contains customary events of default, representations and warranties and covenants, including financial covenants requiring the Company to maintain certain minimum cash and revenue levels upon the occurrence of specified events as more fully set forth in the Loan Agreement. Lenders have participation and notice rights in an amount up to $5.0 million for the future sale and issuance of the Company’s capital stock that is broadly marketed to multiple investors.
Security. As collateral for the obligations, the Company has granted to the Agent a senior security interest in all of Company’s right, title, and interest in, to and under substantially all of Company’s personal property and other assets, excluding intellectual property.
The foregoing description of the material terms of the Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Loan Agreement, a copy of which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
In connection with the entry into the Loan Agreement, the Company issued a warrant to Hercules (the “Hercules Warrant”) and to SVB (the “SVB Warrant” and together with the Hercules Warrant, the “Warrants”).
The Hercules Warrant provides for Hercules to purchase a number of shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) equal to the quotient derived by dividing (i) the amount equal to (a) 1.00% times (b) the aggregate principal amount of Term Loan advances made and funded under the Loan Agreement by (ii) the exercise price. On the Closing Date, the Company issued the Hercules Warrant for 59,642 shares of Common Stock. The Hercules Warrant will be exercisable for a period of seven years from the date of issuance at a per-share exercise price equal to $5.03.
The SVB Warrant provides for SVB to purchase a number of shares of Common Stock equal to 1.00% multiplied by (i) the aggregate amount of the Term Loan advances made and funded under the Loan Agreement divided by (ii) the exercise price. On the Closing Date, the Company issued the SVB Warrant for 59,642 shares of Common Stock. The SVB Warrant will be exercisable for a period of seven years from the date of issuance at a per-share exercise price equal to $5.03.
The issuance of the Warrants by the Company to each of Hercules and SVB was made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
The foregoing description of the material terms of the Warrants does not purport to be complete and is qualified in its entirety by reference to the complete text of the Warrants, copies of which will be filed as exhibits to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Item 2.02 Results of Operations and Financial Condition.
On February 8, 2022, the Company issued a press release commenting on, among other things, unaudited preliminary financial results. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 of this Current Report on Form 8-K regarding the Loan Agreement is incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The information provided in Item 1.01 of this Current Report on Form 8-K regarding the Warrants is incorporated by reference into this Item 3.02.
Item 7.01 Regulation FD Disclosure.
The information provided in Item 2.02 of this Current Report on Form 8-K regarding the press release is incorporated by reference into this Item 7.01.
The information in Item 2.02, Item 7.01 and Item 9.01 (including Exhibit 99.1) to this Current Report on Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information contained in Item 2.02, Item 7.01 and Item 9.01 (including Exhibit 99.1) to this Current Report on Form 8-K shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
|99.1||Press Release dated February 8, 2022.|
|104||Cover Page Interactive Data File (embedded within the Inline XBRL document)|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|Lucira Health, Inc.|
|Date: February 8, 2022||By:|
Chief Financial Officer
Lucira Health Secures Debt Facility of Up to $80 Million from Hercules Capital and Silicon Valley Bank
EMERYVILLE, CA, February 8, 2022 (GLOBE NEWSWIRE) Lucira Health, Inc. (Lucira Health or Lucira) (Nasdaq: LHDX), a medical technology company focused on the development and commercialization of transformative and innovative infectious disease test kits, today announced that on February 4, 2022, it entered into a debt facility of up to $80 million with Hercules Capital, Inc. (NYSE: HTGC) (Hercules) and Silicon Valley Bank (NASDAQ: SIVB) (SVB).
This debt financing will provide Lucira latitude to broaden commercial activities and to bolster capital reserves, said Erik Engelson, President and Chief Executive Officer of Lucira Health. We are pleased to have the support of Hercules and SVB, both highly respected lenders in the life science sectors, and anticipate that this financing, along with our available cash of approximately $106 million as of December 31, 2021, will reinforce Luciras financial health and provide for continued growth opportunities.
Under the term loan, Lucira received the first tranche of $30 million at closing. A second tranche of $20 million will be available between September 1, 2022 and March 31, 2023 upon achieving certain milestones. A third tranche of $15 million will be available prior to June 15, 2023 upon achieving certain milestones. A fouth tranche of $15 million may be made available prior to March 15, 2024, as determined by Hercules and SVB.
Hercules is proud to partner with Lucira in the expanded commercialization of their single-use molecular diagnostic test kits, stated Cristy Barnes, managing director at Hercules. This substantial financial commitment from Hercules exemplifies our dynamic ability to customize financing solutions to support innovative life sciences companies, such as Lucira, through development and commercialization.
Silicon Valley Bank is pleased to be expanding its partnership with Lucira Health to support their efforts to make easy-to-use and highly accurate at-home testing available worldwide via their novel infectious disease test kits, said Kristina Peralta, Senior Vice President, Life Science & Healthcare at Silicon Valley Bank.
The data relating to available cash as of December 31, 2021 presented in this press release reflect our preliminary estimated unaudited financial results for the fourth quarter and year ended December 31, 2021, based upon information available to us as of the date of this press release. We have provided preliminary data primarily because our financial closing procedures
for the year ended December 31, 2021 are not yet complete. The data are not a comprehensive statement of our results for this period, and our actual results may differ materially from these preliminary data. Our actual results remain subject to the completion of managements and our audit committees reviews and our other financial closing processes as well as the completion and preparation of our financial data for the fourth quarter and year ended December 31, 2021. Our independent registered public accounting firm has not audited, reviewed, compiled or performed any procedures with respect to such preliminary data as of December 31, 2021. During the course of the preparation of our financial statements and related notes and the completion of the audit for the fourth quarter and year ended December 31, 2021, additional adjustments to the preliminary financial information presented here may be identified, and our final results for these periods may vary from this preliminary data . This preliminary data should not be considered a substitute for the financial statements to be prepared in accordance with accounting principles generally accepted in the United States and to be filed with the Securities and Exchange Commission in our Annual Report on Form 10-K for the year ended December 31, 2021 once it becomes available. Lucira expects to provide fourth quarter and full year 2021 financial results and 2022 guidance during its fourth quarter 2021 earnings call in March 2022.
About Lucira Health
Lucira is a medical technology company focused on the development and commercialization of transformative and innovative infectious disease test kits. Luciras testing platform produces lab quality molecular testing in a single-use, consumer-friendly, palm-size test kit powered by two AA batteries. Lucira designed its test kits to provide accurate, reliable, and on-the-spot molecular test results anywhere and at any time. The Lucira Check-It COVID-19 Test Kit (OTC) and Lucira COVID-19 All-In-One Test Kit (Rx) are designed to provide a clinically relevant COVID-19 result within 30 minutes from sample collection. For more information, visit www.lucirahealth.com.
About Hercules Capital, Inc.
Hercules Capital, Inc. (NYSE: HTGC) is the leading and largest specialty finance company focused on providing senior secured venture growth loans to high-growth, innovative venture capital-backed companies in a broad variety of technology, life sciences and sustainable and renewable technology industries. Since inception in 2003, Hercules has committed more than $13 billion to over 540 companies and is the lender of choice for entrepreneurs and venture capital firms seeking growth capital financing. Companies interested in learning more about financing opportunities should contact email@example.com, or call 650-289-3060.
About Silicon Valley Bank
Silicon Valley Bank (SVB) helps innovative companies and their investors move bold ideas forward rapidly. SVB provides targeted financial services and expertise through its offices in innovation centers around the world. With commercial, international and private banking services, SVB helps address the unique needs of innovators. Learn more at svb.com.
Forward Looking Statements
Statements contained in this press release regarding matters that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Words such as can, plans, will, may, anticipates, expects, potential, and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon Luciras current expectations and involve assumptions that may never materialize or may prove to be incorrect. Actual results could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties, including our ability to increase production, streamline operations and increase product availability; the success of our test platform with COVID-19 including its variants, the extent and duration of the COVID-19 pandemic and our expectations regarding customer and user demand for our COVID-19 test kit; our ability to obtain and maintain regulatory approval for our test kits, including our existing Emergency Use Authorization for our COVID-19 test kits; the performance of, and our reliance on, third parties in connection with the commercialization of our test kits, including Jabil Inc. and our single-source suppliers; our ability to successfully continue to expand internationally; any impact on our ability to market our products; demand for our products due to deferral of procedures using our products or disruption in our supply chain; our ability to achieve or sustain profitability; our ability to gain market acceptance for our products and to accurately forecast and meet customer demand; our ability to compete successfully; our ability to enhance and expand our product offerings, broaden commercial activities and take advantage of growth opportunities; our ability to accurately predict continued expansion; our ability to accurately forecast revenue; our ability to bolster capital reserves and reinforce our financial health; development and manufacturing problems; capacity constraints or delays in production of our products; maintenance of coverage and adequate reimbursement for procedures using our products; and product defects or failures. These and other risks and uncertainties are described more fully in the Risk Factors section and elsewhere in our filings with the Securities and Exchange Commission and available at www.sec.gov, including in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Any forward-looking statements that we make in this announcement speak only as of the date of this press release, and Lucira assumes no obligation to update forward-looking statements whether as a result of new information, future events or otherwise after the date of this press release, except as required under applicable law.