Shares of Agile Therapeutics (NASDAQ:AGRX) were jumping 8.5% higher as of 3 p.m. EST on Tuesday after rising as much as 15.7% earlier in the day. The big gain came after the drugmaker announced that it had entered into a loan credit facility with Perceptive Advisors that will provide Agile with up to $35 million.
Agile received $5 million in the first tranche of this credit facility. The company will be able to receive another $15 million if hormonal contraceptive patch Twirla wins approval from the U.S. Food and Drug Administration (FDA). The final $15 million in the loan will become available once Agile achieves specified revenue milestones.
Investors liked Agile's loan agreement for a couple of key reasons. Most importantly, the deal provides much-needed cash to the company. At the end of September 2019, Agile had $18.4 million in cash and cash equivalents. The loan credit facility with Perceptive Advisors enables Agile to avoid having to issue new shares to raise more capital, a move that would have diluted the value of existing shares.
The other nice thing about the loan credit facility is that Agile can make interest-only payments until February 2023. This helps stretch out the company's cash for enough time that it should have solid revenue coming in, assuming the FDA approves Twirla.
By far, the most important thing for investors to watch with Agile is what happens with Twirla. In November, the FDA pushed back its date for a decision on the contraceptive until Feb. 16, 2020. An approval for Twirla would likely cause the pharmaceutical stock to soar even more than it did today.