Term Loan |
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Jun. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Term Loan | 5. Term Loan On May 13, 2025 (“Closing Date”), the Company and certain of its subsidiaries entered into a Loan and Security Agreement (“Loan Agreement”) with Hercules Capital, Inc. (“Hercules”) and the lenders party thereto, pursuant to which the lenders will make available up to four tranches of term loans in an aggregate principal amount of $100.0 million (the “Term Loan”), subject to certain terms and conditions. Under the terms of the Loan Agreement, the first Term Loan tranche was drawn down on the Closing Date in an aggregate principal amount of $15.0 million. Upon the achievement of certain milestones and subject to other terms and conditions set out in the Loan Agreement, (i) the second Term Loan tranche will be made available in an aggregate principal amount of up to $25.0 million and (ii) the third Term Loan tranche will be made available in an aggregate principal amount of up to $15.0 million. The fourth Term Loan tranche will be made available in an aggregate principal amount of up to $45.0 million subject to the approval of the lenders. The Term Loan will mature on (the “Maturity Date”). The Term Loan bears interest equal to the greater of (a) the as reported in The Wall Street Journal plus 2.45% and (b) (i) 9.95% until December 31, 2025, and (ii) 9.45% thereafter (the “Interest Rate”). The Company may make payments of interest only through June 1, 2027, which will be extended to December 1, 2027, June 1, 2028, or December 1, 2028, if certain conditions described in the Loan Agreement are met. Thereafter, the Company is obligated to make payments that will include installments of principal and interest through the Maturity Date. The Loan Agreement includes customary representations and warranties and covenants associated with the Term Loan. Such terms include (1) covenants concerning financial and other reporting obligations, and (2) certain limitations on indebtedness, liens, investments, distributions (including dividends), collateral, transfers, mergers or acquisitions, taxes, corporate changes, and deposit accounts. Compliance with the financial covenant will be conditionally waived pursuant to the terms of the Loan Agreement when the Company’s market capitalization exceeds $800 million. The Loan Agreement includes customary events of default, including payment defaults, breaches of representations and warranties, breaches of covenants following any applicable cure period and the occurrence of certain events that could reasonably be expected to have a “material adverse effect” as set forth in the Loan Agreement. As of June 30, 2025, the Company was in compliance with the covenants under the Loan Agreement. The obligation under the Loan Agreement is secured by a security interest in substantially all of the Company’s assets and the assets of its subsidiaries that are co-borrowers or guarantors. Upon the occurrence of an event of default, Hercules will be entitled to exercise remedies, including acceleration of the Term Loan obligations and foreclosure on collateral. The Loan Agreement provides for a prepayment charge equal to 3.0% of the outstanding principal balance of the Term Loan if prepayment is made within the twelve months after closing, 2.0% if within the twenty-four months after closing, 1.0% if within the thirty-six months after closing and 0.0% thereafter. The Loan Agreement provides for an end of term charge of 6.25% of the funded loan amount, due at the earlier of prepayment or maturity. Pro-rata payment of any earned end of term charge will be due upon any partial prepayment (the “End of Term Charge”). In addition, the Loan Agreement requires the Company to pay a facility charge of 1.0% of the Term Loan funded due at the Closing Date and of each subsequent Term Loan tranche at the time such tranche is funded. The Company accounted for the End of Term Charge, Facility Charge, and other direct costs incurred in connection with the Loan Agreement as a debt discount and issuance costs, and they are being amortized over the term of the loan using the effective interest method. The effective interest rate on the Term Loan is 14.4%. The Company incurred interest expense on the Term Loan, including debt discount and issuance costs amortization, of $0.3 million during the three and six months ended June 30, 2025. The Term Loan consists of the following (in thousands):
Future principal loan payments on the currently outstanding Term Loan as of June 30, 2025 are as follows (in thousands):
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