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| Debt | 8. Debt 1.50% Convertible Senior Notes due 2026 In August 2019, the Company issued $200.0 million aggregate principal amount of the 2026 Convertible Notes, governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Company received net proceeds of $195.5 million from the sale of the 2026 Convertible Notes, after deducting fees and expenses of $4.5 million. The Company used $12.6 million of the net proceeds from the sale of the 2026 Convertible Notes to pay the cost of the Capped Calls, as described below. In June 2026, the Company repaid the $200.0 million aggregate principal amount of the 2026 Convertible Notes upon maturity. The 2026 Convertible Notes bore cash interest at the annual rate of 1.50% payable on June 15 and December 15 of each year. No conversions were exercised by holders of the 2026 Convertible Notes. The Company accounts for convertible debt instruments as a single liability measured at amortized cost. As of December 31, 2025, the Company had an outstanding principal balance of $200.0 million and unamortized debt issuance costs of $0.3 million, resulting in a net carrying amount of $199.7 million, which was reported as a current liability. The effective annual interest rate of the 2026 Convertible Notes for the period from the date of issuance through maturity was 1.9%. The effective annual interest rate is computed using the contractual interest and the amortization of debt issuance costs. The following table sets forth total interest expense recognized related to the 2026 Convertible Notes (in thousands):
Capped Calls with Respect to the 2026 Convertible Notes To minimize the impact of potential dilution to the Company’s Class A common stockholders upon conversion of the 2026 Convertible Notes, the Company separately entered into the capped call transactions in August 2019 (the “Capped Calls”) in connection with the issuance of the 2026 Convertible Notes. The Company paid the counterparties $12.6 million to enter into the Capped Calls, of which $12.5 million related to the premium payments and $0.1 million related to transaction costs. These instruments meet the conditions outlined in ASC 815 to be classified in stockholders’ equity and are not subsequently remeasured as long as the conditions for equity classification continue to be met. The Capped Calls in connection with the issuance of the 2026 Convertible Notes, which covered 14,933,740 shares of Class A Common Stock, terminated unexercised upon expiry in June 2026. Revolving Credit Facility In May 2023, in connection with the VectivBio Acquisition, the Company entered into a credit agreement with Wells Fargo Bank, N.A., as administrative agent (in such capacity, the “Agent”), collateral agent, a letter of credit issuer and a lender, and the other agents, lenders and letter of credit issuers parties thereto (collectively, the “Lenders”). In September 2024, the Company, the Agent and the Lenders entered into the first amendment to the revolving credit agreement (as amended from time to time, the “Revolving Credit Agreement”) to, among other things, increase the borrowing capacity from $500.0 million to $550.0 million, extend the maturity date, and increase the Company’s permitted maximum consolidated secured net leverage ratio. The Revolving Credit Agreement provides for a $550.0 million secured revolving credit facility (the “Revolving Credit Facility”), which includes a $10.0 million letter of credit subfacility, and loans made thereunder will mature on December 31, 2028. At the Company’s election, borrowings under the Revolving Credit Agreement will bear interest at a rate equal to (a) Adjusted Term Secured Overnight Financing Rate (“Adjusted Term SOFR”) (as defined in Revolving Credit Agreement) plus the applicable rate (ranging from 1.75% to 3.00%) or (b) the highest of (1) the weighted average overnight Federal funds rate, as published by the Federal Reserve Bank of New York, plus one half of , (2) the prime lending rate or (3) the one-month Adjusted Term SOFR plus 1.0% in effect from time to time plus the applicable rate (ranging from 0.75% to 2.00%). The applicable rates are based on the Company’s consolidated secured net leverage ratio (as defined under the Revolving Credit Facility) at the time of the applicable borrowing. The Company pays a quarterly commitment fee of 0.30% to 0.425% on the daily amount by which the commitments under the Revolving Credit Agreement exceed the outstanding loans and letters of credit. The loans and other obligations under the Revolving Credit Agreement are secured by substantially all of the Company’s personal property, including a pledge of all the capital stock of subsidiaries held directly by the Company or any subsidiary that guarantees the Revolving Credit Agreement following the closing date (which pledge, in the case of any foreign subsidiary, is limited to 65% of the voting stock), subject to certain customary exceptions and limitations. The Revolving Credit Agreement generally prohibits any other liens on the assets of the Company and its Restricted Subsidiaries (as defined in the Revolving Credit Agreement), subject to certain exceptions as described in the Revolving Credit Agreement. Under the terms of the Revolving Credit Agreement, the Company will be able to request an increase in the commitments or the addition of a term loan secured by a pari passu lien on the collateral of up to an additional amount equal to the greater of $200.0 million and 100% of the trailing twelve-month Consolidated Adjusted EBITDA (as defined in the Revolving Credit Agreement) upon satisfaction of customary conditions, including receipt of commitments from either new lenders or increased commitments from existing lenders. The Revolving Credit Agreement contains certain customary covenants applicable to the Company and its Restricted Subsidiaries. The Company is required to maintain a maximum consolidated secured net leverage ratio of 3.00 to 1.00, and a minimum interest coverage ratio of 3.00 to 1.00, in each case at the end of each fiscal quarter. The Revolving Credit Agreement allows the Company to elect to increase the permitted maximum consolidated secured net leverage ratio to 3.50 to 1.00, for up to four fiscal quarters, in the event it consummates an acquisition for consideration in excess of $50.0 million, subject to certain limitations on how often this election can be made. As of June 30, 2026, the Company was in compliance with all covenants under the Revolving Credit Agreement. In connection with the initial execution of the Revolving Credit Agreement during the second quarter of 2023 and the amendment executed in the third quarter of 2024, the Company incurred $2.9 million and $2.2 million of debt issuance costs, respectively, which consisted primarily of lender fees. The debt issuance costs are classified as other assets and are amortized on a straight-line basis over the term of the Revolving Credit Agreement. The Company had unamortized capitalized debt issuance costs of $2.4 million and $2.9 million as of June 30, 2026 and December 31, 2025, respectively. The outstanding principal balance on the Revolving Credit Facility was $385.0 million as of June 30, 2026 and December 31, 2025. The following table sets forth total interest expense recognized related to the Revolving Credit Agreement (in thousands):
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