The California Department of Financial Protection and Innovation today closed Silicon Valley Bank, which could expose medtech companies with relations to the bank.
According to SVB’s website, half of all U.S. VC-backed tech and life science companies used the Santa Clara, California–based bank.
The FDIC — appointed as receiver in the closing — created the Deposit Insurance National Bank of Santa Clara (DINB). This protects insured depositors, the FDIC said in a news release. At the time of closing, the FDIC immediately transferred to the DINB all insured deposits of Silicon Valley Bank.
Silicon Valley Bank’s reach extends to medtech
BTIG analysts issued a list of companies that could be exposed to Silicon Valley Bank. This includes exposure through loan agreements, revolving credit facilities, and more.
The analysts stressed that the list is only based on these companies’ most recent filings. It lacks full additional detail that could help provide context. By relying on filings, the list also doesn’t reflect companies that might hold cash or investments with Silicon Valley Bank. BTIG analysts say they reached out to the companies they listed to better understand the exposure.
Here are the potentially affected companies and some details on their dealings with Silicon Valley Bank:
iRhythm Technologies
iRhythm has a five-year loan agreement expiring March 2027. It includes a term loan of up to $75 million and revolving credit of up to $25 million. As of Dec. 31, 2022, iRhythm had $35 million in outstanding debt under the term loan. It had nothing outstanding under the revolving credit facility.
AtriCure
AtriCure has a five-year loan agreement expiring November 2026. It includes a term loan of $60 million with an option to make available an additional $30 million in term loan borrowings, plus a $30 million revolving line of credit. As of Dec. 31, 2022, AtriCure had $60 million in outstanding debt under the term loan. It also had unused borrowing capacity of around $29 million under the revolving credit line.
ViewRay
ViewRay has a five-year loan facility agreement with MidCap and Silicon Valley Bank expiring in November 2027. It includes a term loan of up to $100 million and a revolving credit facility of up to $25 million. As of Dec. 31, 2022, ViewRay had $80 million in outstanding debt. That includes $75 million from its term loan and $5 million from the revolving credit line.
Treace Medical Concepts
Treace borrowed $50 million under a term loan with MidCap and $4 million under a revolving loan facility with MidCap in April 2022. Term loan proceeds repaid a term loan obligation with CRG and an early termination fee to Silicon Valley Bank amounting to $34 million. That included principal of $30 million, interest of $400,000 and fees totaling $3.7 million. However, Treace has no outstanding debt with Silicon Valley Bank following the repayment. It has an additional $900,000 in cash pledged to Silicon Valley Bank as collateral for its corporate credit card.
Vericel Corporation
Vericel entered into an agreement for SVB Leerink to act as a placement agent to sell $200 million in common stock in an ATM offering in August 2021. SVB Leerink is not required to sell a specified number of shares. As of Dec. 31, 2022, Vericel has sold no shares in relation to the agreement.
Organogenesis
Organogenesis has a term loan facility with Silicon Valley Bank and other lenders totaling up to $75 million. It also has a revolving credit facility of up to $125 million, having finalized an agreement in August 2021. The company currently has $71.25 million in outstanding term loans owed. It’s required to pay the loan in four installments: $4.7 million in 2023, $5.6 million in 2024, $6.6 million in 2025 and $54.6 million in 2026.
Humacyte
Humacyte entered into a $50 million term loan agreement with Silicon Valley Bank in March 2021. Its maturity date falls on March 1, 2025. As of Feb. 28, 2022, Humacyte borrowed $30 million of principal from the loan agreement. It issued Silicon Valley Bank warrants to purchase 123,302 in common stock as collateral for the loan agreement. Its payment schedule related to the $30 million in debt includes $8.6 million in 2023, $17.1 million in 2024 and $4.3 million in 2025.
Lensar
SVB Leerink acted as sales agent for Lensar’s $35 million common stock issuance in an ATM offering on April 8, 2021.
Further info from the FDIC
All insured depositors have full access to insured deposits no later than the morning of Monday, March 13. The FDIC intends to pay uninsured depositors an advance dividend within the next week. As the FDIC sells Silicon Valley Bank’s assets, it may make future dividend payments to uninsured depositors.
Silicon Valley Bank had approximately $209 billion in total assets and about $175.4 billion in total deposits as of Dec. 31, 2022. The bank had 17 branches in California and Massachusetts. Its main office and all branches will reopen on Monday, March 13. DINB will maintain Silicon Valley Bank’s normal business hours.