Omega Therapeutics Responds to Notice of Default in Loan Agreement

On January 13, 2025, Omega Therapeutics, Inc. (NASDAQ:OMGA) received a Notice of Default from Banc of California (BOC) under the Loan and Security Agreement dated March 9, 2018. The Notice of Default highlighted alleged material adverse changes in Omega Therapeutics’ cash runway, financing opportunities, solvency, pre-clinical programs, stock price, and corporate governance, referencing Sections 6.2, 8.3, and 8.5 of the Loan Agreement.

BOC declared all outstanding obligations under the Loan Agreement immediately due and payable, amounting to $14,666,666.72, and set off this amount from deposits held by BOC for Omega Therapeutics. In response, Omega Therapeutics asserted in a letter to BOC that no events of default had occurred or were ongoing. The company stated it had maintained required minimum cash balances, met all financial obligations to BOC timely, and disputed the alleged bases for default mentioned in the Notice of Default.

Omega Therapeutics emphasized that the reasons cited by BOC, including concerns regarding stock price and corporate governance, did not align with the Loan Agreement’s covenants. The company believes it is not in default under the agreement and has attempted to resolve the matter with BOC while reserving its rights to pursue legal or regulatory action.

The current situation sparked the inclusion of forward-looking statements in Omega Therapeutics’ disclosure. These statements caution about significant uncertainties and risks associated with the company’s product development timeline, financial situation, revenue generation, potential profitability, and regulatory challenges. Notably, the company expressed doubts about its ability to continue as a going concern, highlighting the need for substantial additional financing.

While management may consider updating these forward-looking statements in the future, Omega Therapeutics disclaimed any present obligation to do so, regardless of changing circumstances. The company’s response to the Notice of Default reflects its commitment to resolving the matter amicably while safeguarding its interests.

Omega Therapeutics’ President and Chief Executive Officer, Dr. Kaan Certel, authorized the report on January 17, 2025, indicating the official stance of the company in addressing the current situation.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Omega Therapeutics’s 8K filing here.

About Omega Therapeutics

Omega Therapeutics, Inc operates as a clinical-stage biotechnology company. The company's OMEGA platform enables control of fundamental epigenetic processes to correct the root cause of disease by restoring aberrant gene expression to a range without altering native nucleic acid sequences. It also develops OTX-2002 for hepatocellular carcinoma; OTX-2101 for non-small cell lung cancer; omega epigenomic controllers (OEC) for inflammatory lung diseases, such as neutrophilic asthma, acute respiratory distress syndrome, dermatological, oncology, and rheumatological indications; OEC candidates for idiopathic pulmonary fibrosis; liver regeneration medicines; and OEC candidates for patients with diabetes and other conditions to treat corneal epithelial injury.