Long-term debt – related party

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Long-term debt – related party

Long-term debt – related party

Long-term debt – related party consisted of the following (in thousands):

	March 31, 2023		December 31, 2022
Outstanding principal amount of long-term debt — related party	$	11,750	$	12,500
Less: Long-term debt — related party, current	3,000		3,000
Long-term debt — related party, net of current	8,750		9,500
Less: Unamortized debt issuance costs and debt discount, net of current	(129)		(305)
Long-term debt — related party, net of current and discount	$	8,621	$	9,195

On June 5, 2020, contemporaneously with the completion of its Series B Financing, the Company entered into a Credit Agreement, or the Credit Agreement, with Perceptive Credit Holdings III, LP, an affiliate of Perceptive Advisors LLC, or Perceptive, that provided for an aggregate principal borrowing amount of up to $20.0 million, available in two tranches of $12.5 million and $7.5 million. Perceptive was considered a related party to the Company based on its ownership of the Company’s common stock at inception of the Credit Agreement.

In June 2020, the Company drew down on the first tranche of $12.5 million, or the Term Loan, which was outstanding as of March 31, 2023. The Company elected not to draw down the second tranche, which expired on June 30, 2021. The Term Loan bears interest at a variable rate using the greater of LIBOR or 1.75%, plus 9.50%. The interest rate was 14.17% as of March 31, 2023, and the Term Loan is secured by a lien on substantially all of the Company’s assets. When the LIBOR interest rate is discontinued in the future, it is expected that the interest rate of the Term Loan would switch to Secured Overnight Financing Rate, or SOFR. As of March 31, 2023, the effect of switching from LIBOR to SOFR would not be material to the Company’s condensed consolidated financial statements.

The Credit Agreement requires the Company to maintain a minimum aggregate cash balance of $3.0 million in one or more controlled accounts and contains various affirmative and negative covenants that limit its ability to engage in specified types of transactions.

The Company was required to make interest-only payments on the Term Loan through December 5, 2022. In 2023, the Company began making monthly principal payments equal to 2.0% of the Term Loan, plus interest. These payments will continue until June 5, 2024, or the Maturity Date, at which time the outstanding principal and unpaid interest balance is due. If the Company pays off the Term Loan prior to the Maturity Date, it will be required to pay a prepayment fee, which was $0.5 million as of March 31, 2023.

The following table contains the anticipated future minimum payments on long-term debt as of March 31, 2023 for each of the years ending December 31, 2023 and December 31, 2024 (in thousands):

Undiscounted, minimum long-term debt payments:
2023 (nine months ending December 31)	$	2,250
2024	9,500
Total undiscounted, minimum long-term debt payments	$	11,750