Viracta Therapeutics, Inc. (NASDAQ:VIRX), a biopharmaceutical company with a market capitalization of $6.74 million, has entered into a forbearance agreement with its lenders, securing a temporary reprieve from default. According to InvestingPro analysis, the company's financial health is rated as WEAK, with a concerning current ratio of 0.76.
The agreement, made on January 23, 2025, is a modification to the existing Loan and Security Agreement dated November 4, 2021, involving Oxford Finance LLC as the collateral agent and Silicon Valley Bank, among other lenders.
Under the terms of the Third Amendment to the Loan Agreement, Viracta has agreed to apply company cash toward its outstanding debt, grant a security interest in its intellectual property, and adhere to a budget agreed upon with its lenders. InvestingPro data reveals the company is quickly burning through cash, with short-term obligations exceeding liquid assets.
In exchange, the lenders will refrain from exercising their rights and remedies related to the company's previously disclosed default events until the earliest of three conditions: any breach by Viracta of the new amendment's terms, the occurrence of any additional default, or February 5, 2025.
The company has made a significant paydown payment of approximately $3.7 million, following a prior application of $7.7 million of its cash towards the obligations under the Loan Agreement. This leaves Viracta with an outstanding principal balance of approximately $3.5 million.
The details of the Third Amendment, including the specifics of the forbearance and the financial arrangements, will be disclosed in a forthcoming exhibit, as indicated in the SEC filing. This move is intended to provide Viracta with the necessary breathing room to manage its financial obligations and avoid immediate default.
The information in this article is based on a press release statement.
In other recent news, Viracta Therapeutics, Inc. is facing potential delisting from Nasdaq due to non-compliance with audit committee requirements and minimum bid price and stockholders' equity requirements. The pharmaceutical company has been given a grace period to address these issues.
The company's financial health score stands at 1.31 with a current ratio of 0.76, indicating that short-term obligations exceed liquid assets. In response, Viracta has made strategic changes including a 42% workforce reduction to focus on its Nana-val development program for EBV-positive peripheral T-cell lymphoma (PTCL) and resizing its Board of Directors from ten to six members.
The company has reported promising results from the NAVAL-1 trial stages 1 and 2, leading to plans for a Randomized Controlled Trial in 2025. RBC Capital maintained an Outperform rating on Viracta's stock amidst these developments. Lastly, Viracta appointed Michael Faerm as its new Chief Financial Officer and reported cash reserves of around $30 million as of the second quarter of 2024.
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