UroGen Pharma Ltd. Debt Disclosure
NOTE 10 – Long-Term Debt
On March 7, 2022, the Company entered into a loan agreement with Pharmakon for a senior secured term loan of up to $100 million in two tranches. The first tranche of $75 million was funded in March 2022. The second tranche of $25 million was funded in December 2022.
On June 29, 2023, the loan agreement with Pharmakon was amended to replace the benchmark governing the interest rate with a rate based on the secured overnight financing rate ("SOFR") published by the Federal Reserve Bank of New York. Effective July 2023, the loan accrued interest using a benchmark rate of 3-month SOFR plus 8.25% plus an additional adjustment of 0.26161%.
On March 13, 2024, the Company entered into an amended and restated loan agreement with Pharmakon for an additional third and fourth tranche of senior secured loan. The third tranche of $25.0 million was funded in September 2024. The fourth tranche of $75.0 million will become available at the Company's option no later than August 29, 2025, subject to (i) receiving FDA approval of a new drug application (“NDA”) for UGN-102 no later than June 30, 2025 and (ii) the satisfaction of customary bring down conditions and deliverables. Under the amended and restated loan agreement, all outstanding loans with Pharmakon accrue interest using a benchmark rate of 3-month SOFR plus 7.25% plus an additional adjustment of 0.26161%. All outstanding principal will be required to be repaid in four equal quarterly installments commencing in the second quarter of 2026, with a one-year extension possible upon FDA approval of an NDA for UGN-102 by June 30, 2025. All outstanding loans with Pharmakon can be prepaid in whole at the Company's discretion, at any time, subject to prepayment premiums and make-whole amounts. The Company is not required to maintain any financial covenants.
The Company incurred financing expenses of $4.2 million related to the first and second tranches funded in 2022, and $0.5 million related to the third tranche funded in 2024, which are recognized as a direct offset to the long-term debt on the Company's consolidated balance sheets. These debt issuance costs are amortized over the term of the debt using the effective interest method, and are recorded in the consolidated statements of operations as "Interest expense."
The following table shows the activity with respect to the carrying value of the long-term debt, in thousands:
| Carrying value of Pharmakon loan as of December 31, 2022 | $ | 97,537 | |
| Interest expense | 14,715 | ||
| Amounts paid | (13,701 | ) | |
| Carrying value of Pharmakon loan as of December 31, 2023 | 98,551 | ||
| Third tranche of Pharmakon loan | 25,000 | ||
| Capitalized costs and discounts | (512 | ) | |
| Interest expense | 12,521 | ||
| Amounts paid | (13,826 | ) | |
| Carrying value of Pharmakon loan as of December 31, 2024 | $ | 121,734 |
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.