v3.26.1
Indebtedness
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Indebtedness Indebtedness
Exchange Offer and Consent Solicitation
On May 18, 2026, the Company commenced an exchange offer (the “Exchange Offer”) to exchange any and all of its 5.00% Convertible Senior Notes due 2027 issued pursuant to an indenture, dated as of May 21, 2020, and a first supplemental indenture, dated as of May 21, 2020 (together, the “2027 Notes Indenture”), for a pro rata portion of (i) up to $72.0 million in aggregate principal amount of its new 7.50% Convertible Senior Secured First Lien Notes due 2030, (ii) up to 317,647,058 shares of its common stock, par value $0.0001 per share (the “New Shares”) or, in lieu of issuing shares of common stock to the extent any investor would beneficially own greater than 9.99% of the outstanding common stock, prefunded warrants to purchase shares of Common Stock (the “Prefunded Warrants” and, together with the New Shares, the “Equity Securities”) and (iii) up to 150,000,000 warrants to purchase shares of its common stock (the “Purchase Warrants”). Simultaneously with the Exchange Offer, the Company solicited consents (the “Consent Solicitation”) from holders of the 2027 Notes to adopt certain amendments (the “Amendments”) to the 2027 Notes Indenture.
Additionally, on May 18, 2026, and as permitted by the 2027 Notes Indenture, the Company delivered an irrevocable notice of its election to settle all conversions of the 2027 Notes with a conversion date on or after May 18, 2026, solely in cash (the “Cash Settlement Election”). The Cash Settlement Election applied to all 2027 Notes, whether or not tendered in the Exchange Offer.
On June 4, 2026 (the “Early Settlement Date”), the Company completed the early settlement of the exchange of the 2027 Notes that were validly tendered on or before the early tender deadline of 5:00 p.m., New York City time, on June 2, 2026 (the “Extended Early Tender Date”) in the Exchange Offer. Pursuant to the early settlement of the Exchange Offer, $181,052,000 in aggregate principal amount of the 2027 Notes were validly tendered, accepted for exchange by the Company and subsequently cancelled (collectively, the “Early Tendered Notes”). Following such cancellation, $18,948,000 in aggregate principal amount of the 2027 Notes remain outstanding. On the Early Settlement Date, the Company issued (i) $65,174,000 in aggregate principal amount of 2030 Notes, (ii) 254,150,441 New Shares, (iii) 33,402,727 Prefunded Warrants and (iv) 135,789,000 Purchase Warrants, in exchange for the validly tendered and accepted Early Tendered Notes. The Company also completed the Consent Solicitation and entered into a supplemental indenture (the “Supplemental Indenture”) to the 2027 Notes Indenture with Wilmington Trust, National Association, as trustee (the “2027 Notes Trustee”).
The Exchange Offer expired at 5:00 p.m., New York City time, on June 16, 2026. Because no additional 2027 Notes were validly tendered in the Exchange Offer following the Early Settlement Date and prior to the expiration of the Exchange Offer, $18,948,000 in aggregate principal amount of 2027 Notes remain outstanding following this Exchange Offer.
Cancellation of 2027 Notes Tendered in the Exchange Offer
The Company caused the Early Tendered Notes accepted for exchange to be delivered to the 2027 Notes Trustee for cancellation on the Early Settlement Date. There were no additional 2027 Notes accepted following the Early Settlement Date. The Company did not receive any cash proceeds from the Exchange Offer. In exchange for issuing the 2030 Notes, the New Shares, the Prefunded Warrants and the Purchase Warrants pursuant to the Exchange Offer, the Company received and cancelled 90.5% of the 2027 Notes.
2027 Notes
On May 21, 2020, the Company issued $200.0 million aggregate principal amount of the 2027 Notes. The 2027 Notes were registered pursuant to the Company’s shelf registration statement on Form S-3 filed with the SEC on April 10, 2020. The interest rate on the 2027 Notes is fixed at 5.00% per annum. Interest is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2020. The 2027 Notes will mature on June 1, 2027. The net proceeds from the offering, after deducting the underwriting discounts and commissions and other offering costs, were approximately $193.6 million.
Prior to the Cash Settlement Election, the 2027 Notes were convertible, at the holder’s option, only upon satisfaction of specified conditions (including a common stock sale-price condition, a notes trading-price condition, notice of redemption, or the occurrence of certain corporate events), and at any time on or after March 1, 2027, and the Company could elect to settle conversions in cash, shares, or a combination. The initial conversion rate was 61.6095 shares per $1,000 principal amount (an initial conversion price of approximately $16.23 per share), subject to adjustment.
On May 18, 2026, the Company made the Cash Settlement Election, following which all conversions of the 2027 Notes with a conversion date on or after that date are settled solely in cash, irrespective of whether the holder participated in the Exchange Offer. As a result, the embedded conversion option no longer qualified for the own-equity scope exception and, from that date, was bifurcated from the 2027 Notes and accounted for as a derivative liability measured at fair value, with changes in fair value recognized in earnings.
In June 2026, the Company completed the Exchange Offer, in which $181,052,000 aggregate principal amount (90.5%) of the 2027 Notes was tendered and extinguished. Following the Exchange Offer, $18,948,000 aggregate principal amount of 2027 Notes remains outstanding, held by a single non-tendering holder. Because the 2027 Notes mature on June 1, 2027, the remaining 2027 Notes are classified as a current liability as of June 30, 2026.
The Company recorded $0.4 million of the debt issuance costs related to the 2027 Notes as a reduction to the liability and amortizes these costs to interest expense over the term of the 2027 Notes. In June 2026, concurrently with the completion of the Exchange Offer, the remaining unamortized debt discount and issuance costs associated with the exchanged 2027 Notes in the amount of $1.0 million was offset against the gain on debt extinguishment discussed below.
Amendments to the 2027 Notes
Concurrently with the Exchange Offer, the Company solicited and obtained consents from holders of the 2027 Notes to adopt the Amendments to the 2027 Notes Indenture, which were effected through the Supplemental Indenture and eliminated substantially all restrictive covenants and certain events of default applicable to the 2027 Notes, including the $18,948,000
aggregate principal amount that remained outstanding following the Exchange Offer. The Amendments did not reduce the principal amount, reduce or defer the stated interest rate, or extend the maturity date of the remaining 2027 Notes.
The Company evaluated the Amendments under ASC 470-50 and determined that, because the contractual cash flows of the remaining 2027 Notes are unchanged, the present value of the cash flows under the amended terms is not at least 10% different from the present value of the remaining cash flows under the original terms, and the fair value of the embedded conversion feature was likewise unaffected. Accordingly, the Amendments are not substantially different from the original terms and are accounted for as a modification, rather than an extinguishment, of the remaining 2027 Notes. No consideration was exchanged with the holders of the remaining 2027 Notes and no gain or loss was recognized; the Company continues to account for those notes as a continuation of the original debt instrument at the existing effective interest rate. The bifurcated conversion derivative of the remaining 2027 Notes was not altered by the Amendments and continues to be measured at fair value through earnings.
2030 Notes
The 2030 Notes are secured, first lien obligations of the Company. The 2030 Notes will mature on July 1, 2030, unless earlier converted or repurchased in accordance with the terms of the 2030 Notes, provided that the 2030 Notes have a springing maturity date of March 2, 2027 (91 days prior to the stated maturity of the 2027 Notes) if more than $4.0 million of the 2027 Notes remain outstanding at such time. The 2030 Notes bear interest at a rate of 7.50% per annum from June 4, 2026, which interest will be payable in cash semi-annually in arrears on January 1 and July 1 of each year, starting on January 1, 2027.
The conversion rate for the 2030 Notes was initially set to a number of shares of common stock per $1,000 principal amount of New Convertible Notes equal to the quotient of $1,000 divided by a 10% premium to the Reference Price (as defined below), rounded to the nearest 1/10,000th of a share. The “Reference Price” was equal the greater of (i) $0.17 and (ii) the lower of (x) $0.34 and (y) the average of the daily volume-weighted average prices for the seven (7) consecutive VWAP trading days beginning on, and including, the VWAP trading day immediately following the Final Settlement Date. On July 1, 2026, the initial conversion rate for 2030 Notes was established as 5,347.5936 shares of the Company's common stock per $1,000 principal amount of the 2030 Notes, which represents a conversion price of approximately $0.19 per share of common stock, and the initial exercise price of its Purchase Warrants will be $0.34 per whole share of its common stock.
The 2030 Notes Indenture provided that prior to obtaining stockholder approval of certain proposals that would allow the issuance of common stock pursuant to the terms of the 2030 Notes, the Company was permitted to satisfy its obligations upon conversion of the 2030 Notes only in the form of cash settlement. On July 14, 2026, the Company’s stockholders approved such proposals. On July 1, 2026, the conversion rate was established at 5,347.5936 shares of common stock per $1,000 principal amount of the 2030 Notes. Following such stockholder approval, the Company is permitted to satisfy its obligations under the 2030 Notes with any settlement method it is otherwise permitted to elect, including by physical settlement in shares of common stock. Additionally, a holder of 2030 Notes was not permitted to convert its 2030 Notes at any time prior to the later of (a) the date the conversion rate has been determined and (b) the earlier of (1) the date of the special meeting at which the Company seeks stockholder approval of such proposals, whether or not such approvals are obtained and (2) the date that is 61 calendar days following the initial settlement date of the Offered Securities. A “make whole” premium will be payable on the 2030 Notes through an increase to the conversion rate in certain circumstances to compensate converting holders for interest that would have been payable to the maturity date.
The 2030 Notes Indenture includes incurrence based negative covenants, including but not limited to, limitations on debt, limitations on liens and entry into restrictive agreements, limitations on mergers, consolidations or sales of all or substantially all assets, limitations on transactions with affiliates, limitations on restricted payments and investments, limitations on disposals of assets, limitations on foreign subsidiaries and limitations on impairment of security. The 2030 Notes Indenture also includes usual and customary affirmative covenants, including but not limited to, further assurance, payment of obligations, reporting, and compliance certificate. The 2030 Notes Indenture also contains a minimum liquidity covenant that requires the Company to maintain a minimum amount of liquidity of $40 million, tested monthly on the date that the compliance certificate for the applicable month will be delivered and commencing with the fiscal month ending June 30, 2026; provided that the minimum liquidity requirement will be reduced to (x) $20 million, upon completion of one or more equity raises with aggregate proceeds of at least $100 million, (y) $10 million, subject to satisfaction of condition (x) above and written notice from the FDA by December 1, 2026 that it has accepted for filing the Company’s new drug application and (z) $0, subject to satisfaction of conditions (x) and (y) above and completion of one or more equity raises with aggregate proceeds (including all proceeds under condition (x) above) of at least $150 million. The 2030 Notes Indenture contains other customary terms including with respect to events of default, amendments, defeasance, and satisfaction and discharge, and is governed by New York law.
Under certain circumstances and subject to conditions set forth in the 2030 Notes Indenture, the Company may elect to force a mandatory conversion of the 2030 Notes.
If certain corporate events constituting a fundamental change occur (which shall include, among other things, the acquisition by any person or group of more than 50% of the outstanding common stock of the Company or a delisting of the Company’s common stock), the Company shall offer to repurchase all of the outstanding 2030 Notes for cash at a repurchase price equal to 100% of the aggregate principal amount of the 2030 Notes then outstanding plus accrued and unpaid interest. As of June 30, 2026, the Company was in compliance with the covenants under the 2030 Notes.
2030 Notes - Maturity and Balance Sheet Classification
The 2030 Notes have a stated maturity of July 1, 2030. However, the 2030 Notes are subject to a springing maturity: if more than $4.0 million aggregate principal amount of the 2027 Notes remains outstanding on March 2, 2027, the maturity of the 2030 Notes accelerates to March 2, 2027. Because $18,948,000 aggregate principal amount of the 2027 Notes remained outstanding as of June 30, 2026, and is expected to remain outstanding on March 2, 2027, the springing maturity is expected to be triggered. Accordingly, the Company evaluated the classification of the 2030 Notes under ASC 470-10 and classified the 2030 Notes, net of the bifurcated derivative, as a current liability as of June 30, 2026.
2030 Notes - Embedded Derivative
The 2030 Notes contain an embedded conversion feature that requires bifurcation and separate accounting from the debt host pursuant to ASC 815. The conversion feature is accounted for as a derivative liability measured at fair value, with changes in fair value recognized in earnings. Because the Company is required to settle conversions of the 2030 Notes solely in cash until the requisite stockholder approval is obtained, the conversion feature does not qualify for equity classification under ASC 815-40 and is therefore accounted for as a bifurcated derivative. The bifurcated derivative was recorded at fair value on the Early Settlement Date, with an offsetting discount to the carrying amount of the 2030 Notes that is accreted to interest expense over their term.
Following the requisite stockholder approval, the Company is permitted to settle conversions of the 2030 Notes in cash, shares, or a combination thereof, at its election. However, the conversion feature includes an interest make-whole adjustment that delivers a variable number of shares determined by reference to the remaining scheduled interest through maturity. As a result, the conversion feature is not considered indexed to the Company's own stock. Accordingly, even in periods following the approval date, the conversion feature does not qualify for the equity classification under ASC 815-40 and continues to be bifurcated and accounted for as a derivative liability measured at fair value, with changes in fair value recognized in earnings. The fair value of the derivative liabilities was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.
A summary of the changes in the fair value of the derivative liabilities Level 3 rollforward is as follows (in thousands):
Three Months Ended June 30, 2026
Beginning balance at June 4, 2026$47,051 
Change in fair value in net gain(4,113)
Ending balance at June 30, 2026$42,938 
Extinguishment of Debt
The Exchange Offer qualified as a debt extinguishment under ASC 470-50, Debt - Modifications and Extinguishments. Given the substantial doubt about the Company's ability to continue as a going concern disclosed in Note 1 – Liquidity and Going Concern, the Company evaluated the Exchange Offer under ASC 470-60, Troubled Debt Restructurings by Debtors, and concluded that the 2027 Note holders did not grant concession within the meaning of ASC 470-60, because the total consideration received by the holders in exchange for the tendered 2027 Notes did not reflect a concession by them; accordingly, the transaction is accounted for under ASC 470-50 rather than ASC 470-60. The holders of the 2027 Notes tendered 90.5% of the 2027 Notes in exchange for a combination of the 2030 Notes, the New Shares, the Prefunded Warrants and the Purchase Warrants, resulting in a significant reduction of the Company’s outstanding debt.
The exchange of the tendered 2027 Notes for the 2030 Notes, the New Shares, the Prefunded Warrants and the Purchase Warrants was accounted for as a debt extinguishment as follows: (1) the aggregate fair value of the 2030 Notes, the
New Shares, the Prefunded Warrants and the Purchase Warrants issued at the settlement date was recorded as a component of the reacquisition price; and (2) the Company recognized an extinguishment gain equal to the excess of the net carrying amount of the extinguished 2027 Notes over the reacquisition price, measured as the total fair value of the consideration transferred, comprising the aggregate fair value of the 2030 Notes, the New Shares, the Prefunded Warrants and the Purchase Warrants issued.
Gain on Debt Extinguishment
The Exchange Offer qualified as a debt extinguishment under ASC 470-50. Since the aggregate fair value of the 2030 Notes, the New Shares, the Prefunded Warrants and the Purchase Warrants issued in the Exchange Offer were less than the carrying amount of the exchanged 2027 Notes discussed above, the Company recorded a gain debt extinguishment of $43.8 million, included in the other income of the Company's condensed consolidated statement of operations and comprehensive loss.
Issuance Costs
The Company incurred total costs of approximately $9.0 million in connection with the Exchange Offer. Approximately $3.4 million was attributable to the equity-classified New Shares and Prefunded Warrants and reduced the initial carrying amount of those instruments through a charge to additional paid-in capital. The remaining approximately $5.6 million was attributable to the 2030 Notes, the liability-classified Purchase Warrants and the bifurcated conversion derivative. Of that amount, approximately $4.4 million attributable to the instruments measured at fair value through earnings (the Purchase Warrants and the bifurcated derivative) was expensed as incurred and included in other income (loss), and approximately $1.2 million attributable to the 2030 Notes was recorded as a reduction to their carrying value and is accreted to interest expense over the term of the 2030 Notes.
The net carrying amount of the 2027 Notes and 2030 Notes was as follows (in thousands):
June 30, 2026December 31, 2025
Principal amount(1)
$84,122 $200,000 
Unamortized debt discount(2)
(46,789)(1,398)
Unamortized debt issuance cost(3)
(1,188)(94)
Net carrying amount$36,145 $198,508 
_________
(1) As of June 30, 2026, the principal amount includes the 2027 Notes' principal amount of $18.9 million remaining after the Exchange Offer and the 2030 Notes' principal amount of $65.2 million. As of December 31, 2025, the principal amount includes the 2027 Notes' principal amount outstanding prior to the Exchange Offer.
(2) The amount as of June 30, 2026 represents the unamortized embedded derivative in the 2030 Notes, recorded as a single derivative, bifurcated from the host and recorded as a discount in accordance with ASC 815. The Embedded Derivative discount is being amortized to interest expense over the term of the 2030 Notes.
(3) Upon closing of the Exchange Offer, unamortized debt issuance costs associated with the 2027 Notes in the amount of $0.9 million were written off to gain on debt extinguishment in the Company's condensed consolidated statement of operations and comprehensive loss for the quarter ended June 30, 2026.
The following table sets forth the interest expense recognized related to the 2027 and 2030 Notes (in thousands):
Three months ended June 30,Six months ended June 30,
2026202520262025
Contractual interest expense$2,164 $2,500 $4,664 $5,000 
Amortization of debt discount517 229 756 455 
Amortization of debt issuance cost24 15 40 31 
Total interest expense related to the 2027 Notes$2,705 $2,744 $5,460 $5,486