Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt

9. Debt

Current Credit Facilities

On February 18, 2022 (the “Effective Date”), the Company entered into the SLR Loan Agreement with SLR which provides for a term A loan facility of $100.0 million (the “SLR Term A Loan Facility”) and a term B loan facility of $25.0 million (the “SLR Term B Loan Facility” and, together with the Term A Loan Facility, the “SLR Facilities”). The SLR Term A Loan Facility was funded to the Company on the Effective Date. In connection with this draw down, the Company granted SLR warrants to purchase 107,373 shares of the Company’s common stock. The warrants have an exercise price of $13.97 per share, were fully vested upon issuance, are exercisable at the option of the holder, in whole or in part, and expire in February 2032. The SLR Term B Loan Facility will be available to the Company upon achievement of a certain minimum revenue level as more fully described in the SLR Loan Agreement. The proceeds of SLR Term A Loan Facility were used to repay all indebtedness under the Company’s prior loan agreement, as described below.

The SLR Facilities will mature on February 1, 2027 (the “Maturity Date”). Advances under the SLR Facilities bear interest at a floating rate per annum equal to (a) the greater of (i) 0.10% or (ii) the LIBOR Rate, plus (b) 8.30%. At June 30, 2022, the interest rate was 9.42%. The outstanding balance was $100.0 million at June 30, 2022. The SLR Loan Agreement provides for interest-only payments for the first forty-eight months following the Effective Date. Thereafter, payments on the SLR Facilities will be due monthly in twelve equal installments; provided that the Company shall have the option to extend the interest-only period for an additional twelve months upon achievement of a certain minimum revenue level as more fully described in the SLR Loan Agreement. The SLR Facilities may be prepaid in full, subject to a prepayment charge of (i) 3.0%, if such prepayment occurs on or prior to February 17, 2023, (ii) 2.0%, if such prepayment occurs after February 18, 2023 but on or prior to February 17, 2024, and (iii) 1.0%, if such prepayment occurs after February 18, 2024 but on or prior to the Maturity Date (the “Prepayment Penalty”). A facility fee equal to 0.9% of the SLR Term B Loan Facility (the “SLR Term B Loan Facility Fee”), or $225,000, is due on the earliest of (i) the initial funding date, (ii) December 20, 2023, and (iii) the prepayment of the SLR Facilities prior to December 20, 2023. The SLR Term B

Loan Facility Fee is being accrued to interest expense over 22 months. In addition to the payment of principal and accrued interest, the Company will be required to make a payment of 6.95% of the aggregate principal amount of the SLR Facilities funded (the “Facility Exit Fee”), which is payable on the earliest to occur of (i) the Maturity Date, (ii) the acceleration of the SLR Facilities prior to the Maturity Date, and (iii) the prepayment date of the SLR Facilities prior to the Maturity Date. The Facility Exit Fee of $7.0 million is considered fully earned by SLR as of the Effective Date and is being accrued to interest expense over the term of the SLR Term A Loan Facility. The SLR Facilities are secured by a lien on substantially all of the assets, including intellectual property, of the Company.

The SLR Loan Agreement contains customary covenants and representations, including, without limitation, a minimum revenue covenant equal to 75% of each month’s forecasted net product revenue (tested on a trailing six month basis at the end of each fiscal month, commencing with the six month period ending on July 31, 2022) and other financial covenants, reporting obligations, and limitations on dispositions, changes in business or ownership, mergers or acquisitions, indebtedness, encumbrances, distributions and investments, transactions with affiliates and capital expenditures. As of June 30, 2022, the Company was in compliance with all covenants under the SLR Loan Agreement. On August 1, 2022, SLR provided the Company with a one-month extension of the covenant-free period through August 31, 2022, while the Company is in active discussions with SLR regarding a modification of the minimum revenue covenant.

The events of default under the SLR Loan Agreement include, without limitation, and subject to customary grace periods, (1) the Company’s failure to make any payments of principal or interest under the SLR Loan Agreement or other loan documents, (2) the Company’s breach or default in the performance of any covenant under the SLR Loan Agreement, (3) the occurrence of a material adverse effect or an event that is reasonably likely to result in a material adverse effect, (4) the existence of an attachment or levy on a material portion of the Company’s funds or of its subsidiaries, (5) the Company’s insolvency or bankruptcy, or (6) the occurrence of certain material defaults with respect to any other of the Company’s indebtedness in excess of $500,000. If an event of default occurs, SLR is entitled to take enforcement action, including an incremental 5% interest rate increase or acceleration of amounts due under the SLR Loan Agreement (the “Mandatory Prepayment Option”). The Company determined the Mandatory Prepayment Option to be an embedded derivative that is required to be bifurcated from the SLR Loan Agreement. The Company determined the combined probability of an event of default and SLR exercising the Mandatory Prepayment Option to be remote and deemed its fair value to be immaterial as of June 30, 2022. The Company re-evaluates the fair value of the Mandatory Prepayment Option at the end of each reporting period, as applicable.

The SLR Loan Agreement also contains other customary provisions, such as expense reimbursement and confidentiality. SLR has indemnification rights and the right to assign the SLR Facilities, subject to customary restrictions.

The annual principal maturities of the Company’s SLR Facilities as of June 30, 2022 are as follows:

2022 (remaining 6 months)	$	-
2023		-
2024		-
2025		83,333
2026		16,667
Less: Unamortized deferred financing costs		(3,328	)
Long-term loans payable	$	96,672

Prior Credit Facilities

On February 18, 2022, the Company used $47.4 million of the SLR Term A Loan Facility to pay off all obligations owing under, and to terminate, its prior Loan and Security Agreement (the “CIBC Loan Agreement”) with Canadian Imperial Bank of Commerce Innovation Banking (“CIBC”) which provided for a revolving loan facility of $12.0 million (the “CIBC Revolving Facility”) and a term loan facility of $40.0 million (the “CIBC Term Facility” and, together with the Revolving Facility, the “CIBC Facilities”). As a result of the termination of the CIBC Loan Agreement, the Company recorded a loss on extinguishment of debt of $1.1 million, which included the prepayment penalty, write-off of the remaining unamortized deferred financing costs, and legal fees during the first quarter of 2022.

As of December 31, 2021, the Company had $40.0 million of the CIBC Term Facility outstanding under the CIBC Loan Agreement, which accrued interest at a floating rate equal to the Wall Street Journal (“WSJ”) Prime Rate plus 2.5% and was subject to

a floor of 3.25%, and $4.9 million of outstanding borrowings under the CIBC Revolving Facility, which accrued interest at a floating rate per annum equal to the WSJ Prime Rate plus 1.0% and was subject to a floor of 3.25%. The CIBC Term Facility was scheduled to mature on October 21, 2025 and the CIBC Revolving Facility was scheduled to mature on October 21, 2022. As previously mentioned, the CIBC Facilities were fully repaid and terminated on February 18, 2022 when the Company entered into the SLR Loan Agreement.