v3.26.1
DEBT
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
DEBT DEBT
Term Loan
On November 10, 2023, the Company entered into a Loan and Security Agreement with K2 HealthVentures LLC (the “Loan Agreement”). The Loan Agreement provided the Company with a Term Loan in the aggregate principal amount of $50.0 million, of which the Company borrowed $30.0 million in the first tranche upon closing. The remaining $20.0 million is available for borrowing upon the Company’s request based on review of certain information and discretionary approval from the lenders. The principal amount of the Term Loan outstanding under the Loan Agreement bears interest per annum at the greater of (i) 9.65% or (ii) the sum of the prime rate last quoted in The Wall Street Journal plus 1.15% for such interest period. The Term Loan matures on November 1, 2027, and can be extended to November 1, 2028 if the Company achieves certain financing milestones. The Loan Agreement provides for a final payment fee of an additional
$1.6 million (the “Final Payment”) due upon repayment of the Term Loan. As security for its obligations under the Loan Agreement, the Company granted the lenders a security interest in substantially all of the Company’s assets (other than intellectual property).
The principal and interest of the Term Loan are to be repaid in equal monthly installments beginning on July 1, 2026 through the maturity of the Loan Agreement. The Loan Agreement allows prepayment of the entire Term Loan or a portion of the Term Loan of more than $5.0 million, provided that any partial prepayment will leave outstanding borrowings of at least $15.0 million.
The lenders can elect to convert up to $2.5 million of the Term Loan (the “Conversion Amount”) into the Company’s common stock at a conversion price of $2.53 (the “Conversion Option”). Prior to the consummation of the Company’s Private Placement (as defined below), which constituted the Next Qualified Financing (as defined in the Loan Agreement) pursuant to which the Company received aggregate gross proceeds of at least $20.0 million, the lenders also had an option to convert the Conversion Amount at a conversion price equal to the lowest effective cash price per share of securities issued in such Qualified Financing (the “Share-Settled Redemption”). The Conversion Option and Share-Settled Redemption within the Loan Agreement were required to be bifurcated as a single compound embedded derivative (the “Embedded Derivatives”) at fair value, with subsequent changes in fair value recognized in the statements of operations and comprehensive loss.
On March 13, 2026, the Company entered into a securities purchase agreement with certain institutional and accredited investors for a private placement (the “Private Placement”) of shares of the Company’s common stock. See additional information regarding the Private Placement in Note 7. Stockholders' Equity. The Private Placement was a Qualified Financing under the terms of the Loan Agreement and the lenders did not elect to convert the Conversion Amount at the time of the Private Placement. Therefore, the only remaining embedded derivative under the Loan Agreement is the Conversion Option (the “Embedded Derivative”) as the Share-Settled Redemption is no longer an election available to the lenders.
In accordance with the Loan Agreement, the Company issued an equity-classified warrant to purchase 730,769 shares of common stock (the “Loan Warrant”), with an initial allocated fair value of $1.1 million. See additional discussion in Note 7. Stockholders’ Equity.
The initial recognition of the direct fees of $0.5 million, the Final Payment of $1.6 million, the fair value of the Embedded Derivatives at issuance of the Term Loan of $1.2 million and the fair value of the Loan Warrant of $1.1 million for the Loan Agreement resulted in a discount of $4.4 million, which is being amortized 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, 2026December 31, 2025
Principal value of Term Loan, including Final Payment of $1,635
$31,635 $31,635 
Fair value of bifurcated embedded derivatives1,130 1,430 
Unamortized debt discount(1,196)(1,904)
Total31,56931,161
Less: debt, short-term19,6738,765
Total debt, long-term$11,896$22,396
The following table provides the components of interest expense (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Interest expense based on the coupon interest rate of the outstanding debt$732 $732 $1,455$1,456
Accretion of debt discount362 314 708613
Total interest expense related to debt$1,094 $1,046 $2,163$2,069
For the three and six months ended June 30, 2026 the effective interest rate for the Term Loan was 14.8% and 14.6%, respectively. For the three and six months ended June 30, 2025 the effective interest rate for the Term Loan was 14.1% and 14.0%, respectively.
As of June 30, 2026, the aggregate principal payments due for the Term Loan by year are as follows (in thousands):

Year ended December 31, 2026$10,104 
Year ended December 31, 202721,531 
Total principal payments due for Term Loan$31,635