TradeUP (NASDAQ:UPTD) announced in an 8-K this morning that it has added a $6.8 million PIPE to its combination with Estrella Biopharma, which will wipe an equal amount of debt from its books.

Eureka Therapeutics, which was owed $6.8 million by Estrella, will instead receive 680,000 Class B units, each consisting of one common TradeUp share and one preferred share.

While these common TradeUp shares will convert to Estrella shares at the business combination’s close, the preferred shares will do so six months later. These will convert to a number of shares equal to $10 minus the greater of the stock’s last closing price or its 20-day VWAP. In no case will the conversion price be less than $4.15.

Eureka has also agreed to a one-year lock-up for all shares received as a part of this arrangement. So, it gains some downside protection and higher upside on its debt while Estrella gets to enter the public markets with a cleaner balance sheet.

TradeUp initially announced its $398 million combination with Estrella Biopharma in October 2022. Emeryville, California-based Estrella is developing three potential cancer therapies aimed at improving the effectiveness of T-cell treatments.

The SPAC secured a one-year extension of its transaction deadline earlier this month to continue working on the deal and will contribute $0.05 per share monthly moving forward. Redemptions from this vote expanded its total shares redeemed to 83.1%, however, leaving it with just $7.9 million in trust.

TradeUp must provide at least $20 million in cash in order for the deal to close. In April, White Lion Capital agreed to purchase up to $50 million in shares of the combined company after close through a common stock purchase agreement.