Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

4. Debt

The carrying values of the Company's debt obligation were as follows:

	December 31,
($ in thousands)	2022			2021
Loan and Security Agreement	$	17,395		$	25,209
Unamortized discount on Loan and Security Agreement		(630	)		(1,091	)
Total debt		16,765			24,118
Less: long-term debt, current		(16,765	)		(7,868	)
Long-term debt	$	—		$	16,250

On August 6, 2021, the Company entered into the Loan and Security Agreement. The Loan and Security Agreement provided for an initial term loan of $25.0 million funded at the closing, with an additional tranche of $25.0 million available if certain funding and clinical milestones were met by August 31, 2022. On December 28, 2021, the Company entered into the Amended Loan and Security Agreement.

Under the terms of the Amended Loan and Security Agreement, the SVB Facility was modified to eliminate the additional $25.0 million tranche, which remained unfunded, leaving only the initial $25.0 million as the full amount available under the SVB Facility. The SVB Facility bears interest at a floating rate per annum on outstanding loans, payable monthly, at the greater of (a) 7.75% and (b) the current published U.S. prime rate, plus a margin of 4.5%. As of December 31, 2022, interest on the outstanding loans was 12.00%. The Amended Loan and Security Agreement provided for an interest-only period through August 31, 2022. Commencing on September 1, 2022, aggregate outstanding borrowings became repayable in twelve consecutive, equal monthly installments of principal plus accrued interest.

All outstanding obligations under the Amended Loan and Security Agreement are due and payable on August 1, 2023. The Company will also owe SVB 5.75% of the original principal amounts borrowed as a final payment. The Company is permitted to make up to two prepayments, subject to a prepayment premium of the amount being prepaid, ranging from 1.00% to 2.00%, of the SVB Facility, each such prepayment to be at least $5.0 million plus all accrued and unpaid interest on the portion being prepaid.

As a result of not achieving certain milestones specified in the Amended Loan and Security Agreement on or prior to August 31, 2022, the Company was required to cash collateralize half of the sum of the then-outstanding principal amount of the SVB Facility, plus an amount equal to 5.75% of the original principal amount of the SVB Facility. As of December 31, 2022, the Company has collateralized $13.9 million, which is classified as restricted cash on the Balance Sheet. So long as no event of default has occurred and subject to certain other terms related to the remaining outstanding balance under the SVB Facility being satisfied, $2.5 million will be released from the collateral account following the eighth scheduled payment of principal and interest, and a further $4.0 million will be released following the tenth scheduled payment of principal and interest. The SVB Facility and related obligations under the Amended Loan and Security Agreement are secured by substantially all of the Company’s properties, rights and assets, except for its intellectual property (which is subject to a negative pledge under the Amended Loan and Security Agreement). In addition, the Amended Loan and Security Agreement contains customary representations, warranties, events of default and covenants.

In connection with its entry into the Loan and Security Agreement, the Company issued to SVB warrants to purchase (i) up to 432,844 shares of the Company’s common stock, in the aggregate, and (ii) up to an additional 432,842 shares of common stock, in the aggregate, in the event the Company achieved certain clinical milestones, in each case at an exercise price per share of $2.22.

In connection with its entry into the Amended Loan and Security Agreement, the Company amended and restated the warrants issued to SVB. As amended and restated, the warrants are for up to 649,615 shares of the Company's common stock, in the aggregate, at an exercise price per share of $1.16, or the SVB Warrants. The SVB Warrants expire on August 6, 2031.

The issuance costs for the Loan and Security Agreement, including the Amended Loan and Security Agreement, were approximately $1.2 million and primarily related to the warrants issued to SVB, which will be amortized into interest expense over the period to August 1, 2023. Interest expense, including the amortization of issuance costs, was $3.2 million for the year ended December 31, 2022 and $1.2 million for the year ended December 31, 2021.

The fair value of the Amended Loan and Security Agreement as of December 31, 2022 approximates its face value.