Debt |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | 5. Debt Total debt consists of the following (in thousands):
On September 17, 2021, or the Closing Date, the Company entered into a Loan and Security Agreement, or, the Loan Agreement, with Hercules Capital, Inc., or Hercules, in its capacity as administrative agent and collateral agent and as a lender, or, in such capacity, the Agent or Hercules, and the other financial institutions that from time to time become parties to the Loan Agreement as lenders. The Loan Agreement initially provided for term loans in an aggregate principal amount of up to $200 million under multiple tranches. The Company has entered into several amendments to the Loan Agreement since the initial advance and the current loan terms provided for in the latest amendment are described below. On February 25, 2026, or the Fifth Amendment Closing Date, the Company entered into the Fifth Amendment to the Loan and Security Agreement, or the Fifth Loan Amendment, which, among other things, (i) provided for a new term loan advance of $175 million, or the Term Loan Advance, the proceeds of which, along with cash on the Company's balance sheet, were used to repay in full the existing secured obligations outstanding under the Loan Agreement, including principal, capitalized payment-in-kind interest, cash interest, existing final fee payments, and any applicable prepayment fees, (ii) provided for an additional loan tranche of up to $25 million which shall be available to the Company in the lenders’ discretion, (iii) extended the maturity date from December 1, 2027 to February 1, 2029, or the Maturity Date, subject to further extension to December 1, 2030 upon the achievement of a specified revenue milestone and subject to a certain pro forma liquidity test, (iv) extended the interest only period from October 2026 to December 2027, thereafter, monthly payment of interest and principal repayments at 2.5% of the aggregate original principal balance of the Term Loan Advance through the Maturity Date, with any remaining payments to be repaid in full on the Maturity Date, (v) set cash interest rate set at a floating rate based on the greater of (a) US WSJ Prime + 3.10% or (b) 9.85%, (vi) eliminated the payment-in-kind interest rate of 2.15% per annum, (vii) amended the prepayment charge, which is a percentage of the principal amount advanced under the Term Loans under the Fifth Loan Amendment, or each a Term Loan Advance and together, the Term Loan Advances, as follows: (a) if the Term Loan Advances are prepaid after the Fifth Amendment Closing Date but prior to the twelfth month anniversary of the Fifth Amendment Closing Date, 2.50%; (b) if the Term Loan Advances are prepaid on or after the twelfth month anniversary of the Fifth Amendment Closing Date but prior to the twenty-fourth month anniversary of the Fifth Amendment Closing Date, 2.00%; (c) if the Term Loan Advances are prepaid on or after the twenty-fourth month anniversary of the Fifth Amendment Closing Date but prior to the thirty-sixth month anniversary of the Fifth Amendment Closing Date, 1.50%; (d) thereafter, 1.00%; provided that (x) any such prepayment charge shall be reduced by 50.0% if such prepayment is a result of a change in control and (y) upon any refinancing by Hercules such prepayment charge shall be waived in full; and (viii) provided for a new final payment fee which is as a percentage of the Term Loan Advance, calculated as follows: (a) if the Term Loan Advances are repaid prior to September 2027, 1.25%; (b) if the Term Loan Advances are repaid after September 1, 2027 but on or prior to February 1, 2029, 2.00%; (c) if the Term Loan Advances are repaid after February 1, 2029 but on or prior to January 1, 2030, 3.00%, and (d) if the Term Loan Advances are repaid after January 1, 2030, 3.50%. As of June 30, 2026, the Company recorded $3.5 million within other long-term liabilities for the new final payment fee based on the Term Loan Advance being repaid by the Maturity Date. The Company accounted for the Fifth Loan Amendment in accordance with ASC 470-50, Modification and Extinguishments, or ASC 470-50, to determine if the transaction was treated as a modification or an extinguishment of debt. The Company reviewed the debt terms and determined the change would be accounted for prospectively as a partial debt extinguishment in accordance with ASC 470-50. As a result, the Company expensed a portion of the remaining deferred debt issuance costs and fees of $0.8 million associated with the debt prior to the Fifth Loan Amendment, as a loss on partial debt extinguishment within other expense, net in the condensed statements of operations and comprehensive loss during the first quarter of the 2026 fiscal year. Prior to the Fifth Loan Amendment, there were approximately $6.9 million of deferred debt issuance costs remaining to be amortized. The partial extinguishment and modification resulted in a net reduction in deferred issuance fees of $0.5 million with a remaining balance of $6.4 million in debt issuance costs capitalized to be amortized over the three year life of the new debt. As collateral for the obligations, the Company has granted to Hercules a senior security interest in all of Company’s right, title, and interest in, to and under substantially all of Company’s property, inclusive of intellectual property. The Loan Agreement contains customary closing fees, prepayment fees and provisions, events of default, and representations, warranties and covenants, including financial covenants. The financial covenants under the Fifth Loan Amendment include (i) a minimum cash covenant and (ii) a performance covenant as follows: (i) Minimum cash covenant - The Company must maintain a minimum cash balance of 20% of the outstanding principal balance at all times, which will decrease to 15% of the outstanding principal amount upon the Company reporting and maintaining $75 million of trailing three months net product revenue. (ii) Performance covenant - In addition, the Company must satisfy any one of the following: a. Market capitalization exceeding $900 million; b. Minimum cash balance of 50% of the outstanding principal amount of the term loans, which will decrease to 40% upon achieving $65 million of trailing three months net product revenue, and to 30% upon achieving $85 million of trailing three months net product revenue; or c. Trailing three months net product revenue equal to 75% of projected revenue in 2026 and 70% of projected revenue in 2027 and beyond, tested on a quarterly basis. Upon the occurrence of an event of default, subject to any specified cure periods, all amounts owed by the Company may be declared immediately due and payable by Hercules, as collateral agent. As of June 30, 2026, the Company was in compliance with all applicable covenants under the Loan Agreement. In connection with the entry into the initial Loan Agreement, the Company issued to Hercules a warrant, or the Warrant, to purchase a number of shares of the Company’s common stock equal to 2.5% of the aggregate amount of the Term Loan advances. On the Closing Date, the Company issued a Warrant for 74,782 shares of common stock. The Warrant will be exercisable until September 17, 2028 (seven years from the date of issuance) at a per-share exercise price equal to $33.43, which was the closing price of the Company’s common stock on September 16, 2021. The Warrant issued with the initial tranche was not modified as part of the Fifth Loan Amendment. The exercise price and terms of the outstanding Warrant remain unchanged. The $3.5 million of final payment fees and $1.8 million facility fee incurred as part of the Fifth Loan Amendment, along with the $6.4 million of unamortized debt issuance costs as a result of the debt modification, have been recorded as debt discount and are being amortized to interest expense using the effective interest method over the remaining term of the Loan Agreement. Future minimum principal payments under the Loan Agreement, including the final payment fees, as of June 30, 2026 are as follows (in thousands):
During the three months ended June 30, 2026 and 2025, the Company recognized $5.3 million and $7.2 million, respectively, of interest expense, including amortization of the debt discount, in connection with the Loan Agreement. During the six months ended June 30, 2026 and 2025, the Company recognized $11.8 million and $14.3 million, respectively, of interest expense, including amortization of the debt discount, in connection with the Loan Agreement. As of June 30, 2026, the Company had an outstanding loan balance of $175.0 million and accrued interest of $1.4 million. |
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