v3.26.1
Debt
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Debt Debt
Loan and Security Agreement with K2 HealthVentures LLC
On May 22, 2026, or the Closing Date, the Company entered into a Loan and Security Agreement, or the Loan Agreement, with K2 HealthVentures LLC, or K2HV, as administrative agent, certain financial institutions party thereto as lenders (including K2HV) and Ankura Trust Company, LLC, as collateral trustee. The Loan Agreement provides for a senior secured term loan facility with aggregate commitments of up to $150.0 million available in four tranches, or the Term Loan Facility, comprised of:
•a first tranche term loan in an aggregate principal amount of $50.0 million, funded on the Closing Date, or the First Tranche;
•a second tranche term loan in an aggregate principal amount of $25.0 million, available to be drawn between January 1, 2027 and December 1, 2027 subject to the Company’s achievement of specified clinical and financing milestones on or prior to December 1, 2027, or the Second Tranche;
•a third tranche term loan in an aggregate principal amount of $25.0 million, available to be drawn between January 1, 2028 and June 1, 2028 subject to the Company’s achievement of specified approval and sales milestones on or prior to June 1, 2028, or the Third Tranche; and
•a fourth tranche term loan in an aggregate principal amount of up to $50.0 million, available in the lenders’ sole discretion.
The Term Loan Facility bears interest at a variable annual rate equal to the greater of (i) 8.95% and (ii) the prime rate as quoted in The Wall Street Journal plus 2.20%, payable monthly in arrears on the first calendar day of each month. The Term Loan Facility matures on June 1, 2030 and provides for interest-only payments for the first 36 months following the Closing Date, followed by 12 equal monthly payments of principal and interest commencing on the amortization date of July 1, 2029.
The Company may, at its option, prepay all, but not less than all, of the outstanding principal balance together with accrued and unpaid interest and all amounts then due under the Loan Agreement, subject to a prepayment premium and an end of term fee. In addition, prior to repayment in full of the Term Loan Facility, the lenders may jointly elect to convert up to $15.0 million of the outstanding principal into shares of the Company’s common stock, and/or certain other securities issued in a qualifying financing, or the Conversion Shares, subject to a $5.0 million conversion limit prior to the first anniversary of the Closing Date, at a conversion price equal to, at the lenders’ election, either (i) if the relevant Conversion Shares are common stock, $8.2526 per share of common stock or (ii) if the relevant Conversion Shares are shares of common stock or other securities issued in a qualifying financing, the lowest effective price per share or other security in the Company’s next qualified financing; provided, that to the extent such securities issued in a qualifying financing are convertible securities, the conversion price shall equal $1.00 for each $1.00 of notional principal represented by such convertible securities, or the Conversion Option. No prepayment premium applies to principal amounts converted into equity. The Loan Agreement also provides the lenders with certain registration rights, a right to participate in future qualified financings of the Company up to an aggregate of $5.0 million, and customary conversion mechanics and beneficial ownership limitations. As of June 30, 2026, no portion of the outstanding principal had been converted into equity.
Beginning April 1, 2027, the Loan Agreement requires the Company to maintain a minimum unrestricted cash balance at all times when the Company’s market capitalization is less than $750.0 million of at least 80% of the Company’s outstanding obligations to the lenders, subject to reduction to 50% upon achievement of the Second Tranche Milestone, as defined in the Loan Agreement, and will revert to 80% if the Third Tranche Milestone, as defined in the Loan Agreement, is not achieved by the applicable date. Beginning on January 1, 2029, the Loan Agreement requires the Company to maintain compliance with a minimum trailing three-month net product revenue covenant of $40.0 million, tested as of the last day of each calendar quarter, with required quarter-over-quarter growth.
The Company’s obligations under the Loan Agreement are secured by a first priority security interest in substantially all of the Company’s assets, excluding intellectual property, which is subject to a negative pledge. The Loan Agreement contains customary affirmative and negative covenants, including restrictions on additional indebtedness, liens, dividends, investments, asset sales, repurchase of equity, certain affiliate transactions, changes of control, mergers or acquisitions, as well as customary events of default. The Loan Agreement contemplates that the Company’s existing and future material domestic subsidiaries will be required to become co-borrowers or guarantors and to grant a security interest in their assets to secure the obligations under the Loan Agreement. As of June 30, 2026, the Company was in compliance with all covenants under the Loan Agreement.
In connection with the initial borrowing, the Company recognized a $7.4 million debt discount associated with the Compound Derivative, incurred approximately $2.8 million of debt issuance costs and an approximately $1.2 million original issue discount. The amortized cost of the Compound Derivative is included within “Long-term debt” in the consolidated balance sheet as of June 30, 2026. The debt issuance costs and original issue discount were allocated among the funded and contingent borrowing tranches, of which approximately $1.4 million and $0.6 million were allocated to the First Tranche, respectively, and the amortized cost is included within “Long-term debt” in the consolidated balance sheet as of June 30, 2026. The remaining $1.4 million and $0.6 million were allocated to Second Tranche and Third Tranche, respectively, and are deferred within “Long-term prepaid expenses and other assets” in the consolidated balance sheet as of June 30, 2026, and until the related tranche is funded. Deferred debt issuance costs and original issue discount are amortized to interest expense over the term of the Loan Agreement using the straight-line method.
The Company is also required to pay a final payment fee equal to 6.95% of funded principal, or approximately $3.5 million based on the amount funded as of June 30, 2026, which is accreted to interest expense over the term of the Loan Agreement using the effective interest method.
Outstanding debt consisted of the following (in thousands):
June 30, 2026
Term Loan Facility principal$50,000 
Add: Compound Derivative measured at fair value11,940 
Add: accreted final payment fee81 
Less: unamortized Compound Derivative discount(7,232)
Less: unamortized debt issuance costs(1,371)
Less: unamortized original issue discount(567)
Long-term debt, net$52,851 
The following table provides the components of interest expense (in thousands):
Three and Six Months Ended June 30, 2026
Contractual interest$497 
Amortization of Compound Derivative discount173 
Amortization of debt issuance costs33 
Amortization of original issue discount14 
Accretion of final payment fee81 
Amortization of deferred debt issuance costs38 
Amortization of deferred original issue discount16 
Total interest expense$852 
For the six months ended June 30, 2026, the effective interest rate for the Term Loan Facility was approximately 17.7%.
Future principal payments, excluding contractual interest but including the final payment fee of approximately $3.5 million, in connection with the Loan Agreement as of June 30, 2026 are as follows (in thousands):
June 30, 2026
2026 (remainder)$— 
2027— 
2028— 
202928,586 
203024,889 
Total principal payments including final payment fee$53,475