Debt

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Debt

7. Debt

In November 2021, the Company entered into a Loan Agreement with Oxford Finance, which provides the Company up to $50.0 million in borrowing capacity across five potential tranches. The initial tranche of $10.0 million was funded at the closing of the Loan Agreement, and an additional $10.0 million will be available at the Company’s election from July 1, 2022 to December 30, 2022. Subsequent tranches of $20.0 million each would become available upon achieving milestones related to the Company’s MISSION Phase 2 clinical trial, PRESIDIO Phase 2 clinical trial and KZR-261 Phase 1 clinical trial, up to the aggregate maximum amount of $50.0 million. The loan facility is secured by all assets except intellectual property, which has a negative pledge, and will mature on November 1, 2026. There are no warrants or financial covenants associated with the Loan Agreement.

The term loans bear interest at a floating per annum rate (based on the actual number of days elapsed divided by a year of 360 days) equal to the sum of (a) the greater of (i) 30-day U.S. LIBOR rate reported in the Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue and (ii) 0.08%, plus (b) 7.87%. The Company is required to make monthly interest-only payments prior to the amortization date of January 1, 2025, subject to a potential one-year extension upon satisfaction of certain conditions.

All unpaid principal and accrued and unpaid interest with respect to each term loan is due and payable in full on November 1, 2026 (the “Maturity Date”). The Company has the option to prepay the outstanding balance prior to maturity, subject to a prepayment fee of 1.0% to 2.0% depending upon when the prepayment occurs. Upon repayment of the Term Loans, the Company is required to make a final payment fee to the Lenders equal to 6.5% of the original principal amount of the Term Loans funded which will be accrued by charges to interest expense over the term of the loans using the effective interest method.

The Agreement also includes subjective acceleration clauses which permit the lenders to accelerate the Maturity Date under certain circumstances, including, but not limited to, material adverse effects on a Company’s financial status or otherwise. As of December 31, 2021, the Company is in compliance with all covenants in Agreement.

Interest expense was $0.2 million for the year ended December 31, 2021. The effective interest rate on the term loans, including the amortization of the debt discount and issuance costs, and accretion of the final payment, was 11%. The components of the long-term debt balance are as follows:

	December 31, 2021			December 31, 2020
Principal loan balance	$	10,000		$	—
Unamortized debt discount and issuance costs		(431	)		—
Cumulative accretion of final fee		53			—
Long-term debt, net	$	9,622		$	—

As of December 31, 2021, the estimated future principal payments due were as follows:

Years Ending December 31,
2022	$	—
2023		—
2024		—
2025		5,217
2026		4,783
Total	$	10,000