Apnimed Inc. announced it entered into a senior secured credit facility for up to $150 million with funds managed by HealthCare Royalty Partners to support commercial readiness activities for its sleep apnea treatment AD109.

The Cambridge, Massachusetts-based pharmaceutical company will receive $50 million at closing, according to a company statement. An additional $50 million becomes available upon FDA approval of AD109, with a third $50 million tranche accessible upon achieving a pre-specified sales milestone.

The financing includes an interest-only period of four years, extending to five years if Apnimed achieves a specified net sales milestone. The company agreed to pay a synthetic royalty equal to a low single-digit percentage of net sales of AD109 and certain other specified revenues.

Apnimed plans to submit a New Drug Application for AD109 to the FDA later this quarter. The oral pill is designed to treat obstructive sleep apnea by addressing neuromuscular root causes of upper airway collapse during sleep.

"This strategic financing provides significant financial flexibility and supports our continued progress toward the potential U.S. commercialization of AD109, if approved," said Larry Miller, Chief Executive Officer of Apnimed.

AD109 is a combination of aroxybutynin, a novel antimuscarinic, and atomoxetine, a selective norepinephrine reuptake inhibitor. The company reported positive results from pivotal SynAIRgy and LunAIRo Phase 3 trials for the treatment.

HealthCare Royalty Partners is majority owned by KKR & Co. Inc. (NYSE: KKR) and has committed over $7 billion in more than 110 biopharmaceutical products over two decades.