Long-term Debt

6 Months Ended

Jun. 30, 2022

Disclosure Text Block [Abstract]

Long-term Debt

6. Long-term Debt

Amended and Restated Loan Agreement

In December 2019, we entered into a term loan agreement, or 2019 Term Loan, with funds managed by Pharmakon Advisors LP, which are BioPharma Credit PLC, as collateral agent, Biopharma Credit Investments V (Master) LP, as a lender, and BPCR Limited Partnership, as a lender, and collectively with Biopharma Credit Investments V (Master) LP, the Lenders, for a senior secured credit facility consisting of an initial term loan of $75.0 million, with an option to draw an additional $75.0 million until December 31, 2020. The first tranche of $75.0 million was funded in December 2019 and the second tranche of $75.0 million was funded in November 2020.

In December 2021, we entered into an amended and restated loan agreement, or A&R Term Loan, which superseded in its entirety the 2019 Term Loan, and provided us with an additional term loan commitment from the Lenders in the aggregate principal amount of $100.0 million, or which we refer to as the Tranche C Loan. Further, the A&R Term Loan extended the maturity date and interest payments for the previous tranches under the 2019 Term Loan to conform with the new Tranche C Loan. The maturity date of the A&R Term Loan was extended to December 17, 2027, with interest-only payments extended to March 31, 2025. The Term Loan bears interest at a floating per annum interest rate equal to 7.00% plus the greater of (a) the 3-month LIBOR rate and (b) 2%. Interest on amounts outstanding are payable quarterly in arrears. The obligations under the A&R Term Loan are secured by a first priority security interest in and a lien on substantially all of our assets, subject to certain exceptions. The Tranche C Loan was funded in December 2021.

In the event we default, the interest rate would be 3% above the rate that is otherwise applicable thereto. Interest on amounts outstanding are payable quarterly in arrears.

We have the option to prepay all or a portion of the borrowed amounts under the A&R Term Loan. If we exercise this option, we must pay a prepayment fee between 1% and 3% of the principal amount being prepaid, or Prepayment Fee, depending on the timing of the prepayment. If the prepayment occurs before December 2024, we must also pay an amount equal to the sum of all

interest that would have accrued and been payable from date of prepayment through December 2026, or Make Whole Amount. We are obligated to pay an additional fee to the Lenders determined by multiplying the principal amount being paid or prepaid multiplied by 2%, or Paydown Fee, when such payments are made.

In the event of default or change in control, all unpaid principal and all accrued and unpaid interest amounts (if any) become immediately due and payable, at which point, we will be subject to the Prepayment Fee, the Make Whole Amount (if any) and the Paydown Fee. Events of default include, but are not limited to, a payment default, a material adverse change and insolvency.

Using the net present value method, we concluded the amendment and restatement of the 2019 Term Loan should be accounted for as a debt modification as the present value of the remaining cash flows of the A&R Term Loan are not substantially different from the present value of the remaining cash flows of the 2019 Term Loan. As the amendment was accounted for as a debt modification, no gain or loss was recognized.

Debt issuance costs associated with the Tranche C Loan paid directly to the Lenders of $3.4 million were treated as discounts on the A&R Term Loan and the other debt issuance costs of $0.1 million were expensed as incurred. The debt discounts associated with the Tranche C Loan, the remaining unamortized debt discounts associated with the 2019 Term Loan as of the debt amendment date, and the Paydown Fee are being amortized or accreted to interest expenses throughout the remaining life of the A&R Term Loan using the effective interest rate method. As of June 30, 2022, there were unamortized issuance costs and debt discounts of $4.4 million, which were recorded as a direct deduction from the A&R Term Loan on the consolidated balance sheet.

Future payments of principal and interest on the A&R Term Loan as of June 30, 2022 (in thousands):

2022 (six months)	$	11,250
2023		22,500
2024		22,500
2025		104,688
2026		97,188
2027		89,688
Total minimum payments		347,814
Less: amount representing interest		(92,814	)
Less: amount representing Paydown Fee		(5,000	)
Long-term debt, gross		250,000
Discount on notes payable		(4,419	)
Accretion of Paydown Fee		1,549
Long-term debt	$	247,130