v3.26.1
Debt
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Debt

11. Debt

Convertible Senior Notes Due 2025

On August 7, 2017, we completed a private placement of $192.5 million aggregate principal amount of our 2025 Notes.

The 2025 Notes were convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election.

In June 2025, we elected to settle the 2025 Notes in shares. Approximately $192.5 million of the principal amount was converted into 11,148,918 shares of our common stock. The remaining principal balance of $25,000 was fully paid in cash upon the maturity date on August 15, 2025.

The annual effective interest rate on the 2025 Notes in 2025 up to its settlement was 2.90%.

The following table sets forth total interest expense recognized related to the 2025 Notes for the three and six months ended June 30, 2025:

(In thousands)

 

Three Months Ended June 30, 2025

 

 

Six Months Ended
June 30, 2025

 

Contractual interest expense

 

$

1,199

 

 

$

2,402

 

Amortization of debt issuance costs

 

 

188

 

 

 

375

 

Total interest and amortization expense

 

$

1,387

 

 

$

2,777

 

 

Convertible Senior Notes Due 2028

In March 2022, we completed a private placement of $261.0 million aggregate principal amount of our 2028 Notes, which will mature on March 15, 2028.

The 2028 Notes bear interest at an annual rate of 2.125% that is payable semi-annually in arrears in cash on March 15 and September 15 of each year, beginning on September 15, 2022.

The 2028 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election. The initial conversion rate was 38.1432 shares per $1,000 principal amount of the 2028 Notes, subject to customary anti-dilution adjustment in certain circumstances, which represented an initial conversion price of approximately $26.22 per share.

The annual effective interest rate on the 2028 Notes is 2.70%.

Our outstanding 2028 Notes balance consisted of the following:

 

 

 

June 30,

 

 

December 31,

 

(In thousands)

 

2026

 

 

2025

 

Principal

 

$

261,000

 

 

$

261,000

 

Debt discount and issuance costs, net

 

 

(2,546

)

 

 

(3,269

)

Net carrying amount

 

$

258,454

 

 

$

257,731

 

 

The following table sets forth total interest expense recognized related to the 2028 Notes for the three and six months ended June 30, 2026 and 2025:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(In thousands)

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Contractual interest expense

 

$

1,386

 

 

$

1,387

 

 

$

2,773

 

 

$

2,773

 

Amortization of debt discount and issuance costs

 

 

360

 

 

 

349

 

 

 

723

 

 

 

703

 

Total interest and amortization expense

 

$

1,746

 

 

$

1,736

 

 

$

3,496

 

 

$

3,476

 

 

Debt Maturities

The aggregate scheduled maturities of our convertible debt as of June 30, 2026 were as follows:

 

(In thousands)

 

Amount

 

Years ending December 31:

 

 

 

Remainder of 2026

 

$

—

 

2027

 

 

—

 

2028

 

 

261,000

 

Total

 

$

261,000

 

Deferred Royalty Obligation

As part of our acquisition of La Jolla, we recorded the fair value of its deferred royalty obligation in connection with La Jolla’s royalty financing agreement (“La Jolla Royalty Agreement”) with HealthCare Royalty Partners (“HCR”). Under the terms of the La Jolla Royalty Agreement, HCR is entitled to receive quarterly royalties on worldwide net sales of GIAPREZA® until either January 1, 2031 or when the maximum aggregate royalty payments have been made, whichever occurs first. Quarterly payments to HCR under the Royalty Agreement start at a maximum royalty rate, with step-downs based on the achievement of annual net product sales thresholds. The maximum royalty rate through December 31, 2023 was 14%. Starting January 1, 2024, the maximum royalty rate was increased to 18% based on the terms of the Agreement. The La Jolla Royalty Agreement is subject to maximum aggregate royalty payments to HCR of $225.0 million.

We recognized interest expense of $3.7 million and $7.4 million for the three and six months ended June 30, 2026, respectively, and $1.5 million and $3.1 million for the three and six months ended June 30, 2025, respectively. The carrying value of the deferred royalty obligation as of June 30, 2026 and December 31, 2025 was $61.6 million and $62.2 million, respectively (refer to Note 8, “Balance Sheet Components”). During the six months ended June 30, 2026 and 2025, we made royalty payments to HCR of $7.6 million and $6.1 million, respectively. The deferred royalty obligation was valued using Level 3 inputs, and its carrying value as of June 30, 2026 approximates fair value. The fair value of the deferred royalty obligation was calculated as the discounted deferred royalty obligations based on risk-adjusted revenue projections for GIAPREZA®. As of June 30, 2026, the annual effective interest rate of the deferred royalty obligation for the current period is 26.38%.

Certain contract provisions within the La Jolla Royalty Agreement that could result in an acceleration of amounts due under the La Jolla Royalty Agreement are recognized as embedded derivatives that require bifurcation from the deferred royalty obligation and fair value recognition. We determined the fair value of each derivative by assessing the probability of each event occurring, as well as the potential repayment amounts and timing of such repayments that would result under various scenarios. As a result of this assessment, we determined that the fair value of the embedded derivatives is not material and, therefore, not recognized as of June 30, 2026 and December 31, 2025. We estimate the fair value of the embedded derivatives for each reporting period until either the features lapse or the La Jolla Royalty Agreement is terminated, whichever occurs first. Any material change in the fair value of the embedded derivatives will be recorded as either a gain or loss in the consolidated statements of income and comprehensive income.