Term Debt Options for Life Science and Medical Device Companies

As we ring in the New Year, we here at Capital Advisors Group would like to take stock of the year past and what lies ahead in 2016. Two important themes that underpin the changing of the calendar year have been the Federal Reserve raising interest rates and an economy which is seeing higher asset prices but underperforming inflationary growth. The mechanics of those changing dynamics will reverberate across the financial markets moving forward, including private equity and investment markets. Hesitancy in the equity investment market can have a cascading effect, potentially leading to underfunded companies and subpar growth.

One potential strategy for companies confronting an uncertain equity investment environment can be an appeal to the debt markets. Using debt to leverage a recent equity round (either from a series investment or from a recent IPO) can be an effective, non-dilutive, and prudent form of financing. Venture capital-backed life science and medical device companies managing lengthy product cycles and regulatory processes often use debt financing to extend cash runways. Debt financing can come in many types of structures, from venture lending to royalty financing to structured finance. These options give a wide range of structures for companies requiring extra growth equity or acquisition funding. In this month’s debt white paper, we explore these options, their characteristics, and how they might be most effectively used.

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Best Regards,

Ben Campbell
President & CEO