MoonLake ImmunotherapeuticsMLTX
MoonLake Immunotherapeutics Debt Disclosure
Debt
On March 31, 2025 (the “Closing Date”), MoonLake as a guarantor entered into a loan and security agreement (the “Loan and Security Agreement”) with its subsidiary, MoonLake AG, as borrower, the lenders party thereto (the “Lenders”), and Hercules Capital, Inc., as the administrative and collateral agent for itself and the Lenders. The Loan and Security Agreement provides a non-dilutive senior secured term loan facility (the “Credit Facility”) of up to an aggregate principal amount of $500.0 million. The Credit Facility matures on April 1, 2030 and bears interest at an annual rate equal to the greater of (i) prime rate as reported in The Wall Street Journal plus 1.45% and (ii) 8.45%, subject to a 0.25% reduction upon achievement of the U.S. Food and Drug Administration's (“FDA”) approval of a Biologics License Application (“BLA”) for SLK.
The Credit Facility comprises:
a.A first tranche (the “Tranche 1 Loan”) in an aggregate principal amount of $75.0 million fully funded on the Closing Date,
b.Subject to MoonLake’s announcement that the VELA-1 and VELA-2 Phase 3 studies of SLK in adult patients with moderate to severe hidradenitis suppurativa each achieved their protocol-specified primary endpoint with SLK having demonstrated an acceptable safety profile (the “Tranche 2 Milestone”), a second tranche with additional term loans in an aggregate principal amount of up to $125.0 million, available on the Tranche 2 Milestone achievement date through the earlier of (i) 30 days following such date and (ii) December 31, 2025,
c.Subject to MoonLake's announcement that the IZAR-1 and IZAR-2 Phase 3 studies of SLK in patients with active psoriatic arthritis each achieved their protocol-specified primary endpoint with SLK having demonstrated an acceptable safety profile (the “Tranche 3 Milestone”), a third tranche (the “Tranche 3 Loan”)
with additional term loans in an aggregate principal amount of up to $50.0 million, available on the Tranche 3 Milestone achievement date through the earlier of (i) 60 days following such date and (ii) September 15, 2026,
d.Subject to the Company’s achievement of the Tranche 2 Milestone and Tranche 3 Milestone and the FDA’s acceptance of the Company’s submission of a BLA for SLK (collectively, the “Tranche 4 Milestone”), a fourth tranche with additional term loans in an aggregate principal amount of up to $50.0 million, available on the Tranche 4 Milestone achievement date through the earlier of (i) 60 days following such date and (ii) March 15, 2027, and
e.Subject to approval by the Lenders’ in their discretion, a fifth tranche (the "Tranche 5 Loan") of additional term loans in an aggregate principal amount of up to $200.0 million.
On September 28, 2025, the Company announced the primary endpoint results of the VELA-1 and VELA-2 Phase 3 studies. While VELA-1 met the primary endpoint, a higher-than-expected placebo response at week 16 precluded VELA-2 from meeting the pre-specified primary endpoint and, as a result, the Company did not achieve the Tranche 2 and Tranche 4 Milestones. As of December 31, 2025, the Company had $250.0 million of remaining undrawn tranches, representing the aggregate principal amount available to be drawn under the Credit Facility.
As of December 31, 2025, the Company's carrying value of long-term debt and recognized deferred charges on the consolidated balance sheet consists of the following:
(in thousands) | ||||||||
Non-current liabilities | December 31, 2025 | |||||||
Principal amount | $ | 75,000 | ||||||
Accreted present value of End of Term Charge | 3,618 | |||||||
Unamortized End of Term Charge | (2,837) | |||||||
Unamortized debt issuance cost | (958) | |||||||
Unamortized debt discount | (723) | |||||||
Carrying value | $ | 74,100 | ||||||
Non-current assets | ||||||||
Deferred charges - long-term debt | $ | 587 | ||||||
Total | $ | 587 | ||||||
The effective interest rate is 10.41% and the Company recognized interest expense of $7.2 million on the Loan and Security Agreement for the year ended December 31, 2025. A portion of the debt issuance costs related to the undrawn third and fifth tranches were recognized as deferred charges until drawn. The debt issuance costs related to the second and fourth tranches have been recognized as interest expense in the current period.
The Company may prepay advances in whole at any time subject to a prepayment charge. Upon repayment of all term loans on or after April 1, 2027, the Company is further required to pay an additional charge equal to 6.95% for the Tranche 1 Loan and any draws under the Tranche 3 Loan; 4.25% for any draw under the Tranche 5 Loan, and if repayment occurs prior to 24 months, the charge applied will be 4.25% ("End of Term Charge"). As of December 31, 2025, the End of Term Charge is accrued at 6.95% of the Tranche 1 Loan balance and is recorded at present value as an addition to the long-term debt in non-current liabilities whereas the unamortized portion is recorded as contra non-current liabilities. The unamortized contra-liability will be amortized and the present value will be accreted up to the future value over the loan term as interest expense. The Tranche 1 Loan has a maturity requirement of $75.0 million due in 2030, with no other principal payments due for each of the five years following the date of the latest consolidated balance sheets presented. Additional fees will be payable in connection with the Credit Facility upon drawing of future tranches.
The Loan and Security Agreement allows for the Company to satisfy a portion of the cash interest payments by capitalizing such interest payments as payment-in-kind (“PIK”). No PIK interest relating to the term loan has been recorded and included in the consolidated balance sheet as of December 31, 2025.
The Loan and Security Agreement contains customary covenants, such as financial covenants and certain events of default after which loans under the Credit Facility may be due and payable immediately. The Company was in compliance with all covenants as of December 31, 2025.
All obligations under the Loan and Security Agreement will be secured on a first-priority basis, subject to certain exceptions, by security interests in substantially all assets of the Company and material subsidiaries of the Company, including its intellectual property, and will be guaranteed by material subsidiaries of the Company, including foreign subsidiaries, subject to certain exceptions.
Refer to Note 18 — Subsequent Events for further discussion on the amendment to the Loan and Security Agreement subsequent to the year ended December 31, 2025.
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.