Debt Facility |
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Mar. 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Facility | 6. Debt Facility On March 26, 2025, the Company, as borrower, entered into a Loan and Security Agreement (the “Hercules Loan Agreement”) with the lenders party thereto (the “Lenders”) and Hercules Capital, Inc., as administrative agent and collateral agent. The initial advance of $30 million under the Hercules Loan Agreement was drawn in March 2025 and used to repay all outstanding obligations under the Company’s prior term loan with Silicon Valley Bank ("SVB Loan"), to pay the Company’s expenses in connection with the Hercules Loan Agreement, and for general corporate purposes. See Note 7, Debt Facility, to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for more information regarding the Hercules Loan Agreement. On January 26, 2026, the Company entered into a First Amendment (the “First Amendment”) to the Hercules Loan Agreement, with the Lenders and Hercules Capital, Inc., as administrative agent and collateral agent. As amended, the Loan Agreement provides for the Company to borrow up to an aggregate of $105 million of term loans. The First Amendment amended the Loan Agreement to provide that upon achievement of the Approval Milestone, the Company may borrow up to $75 million of additional term loans, as follows: • Up to $45 million through the earlier of (i) 120 days following the Approval Milestone or (ii) June 30, 2027 (the “First Post-Approval Tranche”). • Beginning upon the earlier of the full draw or expiration of the First Post-Approval Tranche, up to $30 million through the earlier of (i) 120 days following the Approval Milestone or (ii) June 30, 2027. The First Amendment extended the dates by which the Company may be required to comply with two financial covenants, extending the initial date for compliance with the Cash Requirement to April 1, 2027, and the date for compliance with the Conditional Minimum Revenue Covenant to September 30, 2027, if its market capitalization falls below the previously reported thresholds for each respective covenant. The Hercules Loan Agreement, as amended by the First Amendment, grants the Lenders a first-priority perfected security interest in the Company’s intellectual property that will convert to a negative pledge if the Company terminates the Purchase Agreement with funds managed by the Purchaser, as further described below in Note 9. Commitments and Contingencies, prior to receiving funds under the Purchase Agreement and so long as the Company maintains $50 million or more in unrestricted cash. As of March 31, 2026, approximately $0.4 million of fees consisting of legal, commitment and facility charges, paid to the Lenders were capitalized and will be amortized over the term of the Hercules Loan Agreement. The Company has identified certain embedded features within the Hercules Loan Agreement. The Company assessed these features and determined the one feature related to interest due upon an event of default (the “Default Penalty”) is required to be bifurcated from the debt and accounted for separately at fair value. As of March 31, 2026, the Default Penalty does not have a discernable fair value and no amounts are recorded.
The Company evaluated the Loan Agreement, as amended by the First Amendment, under ASC 470-50, “Debt - Modification and Extinguishment,” and concluded that the amended terms represented a decrease in the borrowing capacity of a delayed draw term loan with a single lender. Accordingly, the Company immediately recognized an expense equal to 19% of the Hercules Loan Agreement unamortized deferred financing costs while the remaining unamortized debt financing costs and any new deferred financing costs incurred as part of the First Amendment are being amortized over the term of the remaining new arrangement pursuant to the terms of the First Amendment. The Company accounted for the repayment of the SVB Loan in the first quarter of 2025 as an extinguishment in accordance with the guidance in ASC 470-50 and recognized a loss associated with the extinguishment of approximately $0.5 million in other income(expense) in the accompanying consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025.
Summary of Carrying Value The following table summarizes the components of the long-term debt carrying value, which approximates the fair value (in thousands):
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