Mandatorily Redeemable Preferred Shares, net

3 Months Ended

Mar. 31, 2022

Other Liabilities Disclosure [Abstract]

Mandatorily Redeemable Preferred Shares, net

RPI Series A Preferred Shares

In April 2019, the Company sold 2,495 Series A Preferred Shares (the "Series A Preferred Shares") to RPI at a price of $50,100 per preferred share pursuant to a Series A preferred share purchase agreement (the "Preferred Share Agreement"). The gross proceeds from the transaction with RPI were $125,000, with $105,000 of the proceeds used to purchase a priority review voucher ("PRV") issued by the United States Secretary of Health and Human Services to potentially expedite the regulatory review of the new drug application ("NDA") for the ODT formulation of rimegepant and the remainder of the proceeds to be used for other general corporate purposes.

The holders of the Company's outstanding Series A Preferred Shares will have the right to require redemption of the shares in certain circumstances. If a Change of Control, as defined in the Company's memorandum and article of association, occurs and the Series A Preferred Shares have not previously been redeemed, the Company must redeem the Series A Preferred Shares for two times (2x) the original purchase price of the Series A Preferred Shares payable in a lump sum at the closing of the Change of Control or in equal quarterly installments following the closing of the Change of Control through December 31, 2024.

The Company may redeem the Series A Preferred Shares at its option at any time for two times (2x) the original purchase price, which redemption price may be paid in a lump sum or in equal quarterly installments through December 31, 2024.

In the event that the Company defaults on any obligation to redeem Series A Preferred Shares when

required, the redemption amount shall accrue interest at the rate of eighteen percent (18%) per annum. If any such default continues for at least one year, the holders of such shares shall be entitled to convert, subject to certain limitations, such Series A Preferred Shares into common shares, with no waiver of their redemption rights.

The Company is required to redeem the Series A Preferred Shares for two times (2x) the original purchase price, payable beginning March 31, 2021 in equal quarterly installments through December 31, 2024. Accordingly, the Company has concluded the Series A Preferred Shares are mandatorily redeemable instruments and classified as a liability. The Company initially measured the liability at fair value, and will subsequently accrete the carrying value to the redemption value through interest expense using the effective interest rate method. The effective interest rate under the Preferred Share Agreement, including transaction costs, was determined to be approximately 20% as of March 31, 2022. The Company recognized $6,463 and $7,943 in interest expense for the three months ended March 31, 2022 and 2021, respectively. The Company had 1,715 and 1,871 Series A preferred shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.

The following table shows the activity within the Series A preferred share liability for the three months ended March 31, 2022 and 2021, respectively:


	Carrying Value
Gross balance at December 31, 2021	$	141,740
Interest expense recognized, excluding transaction cost amortization	6,452
Redemption of Series A preferred shares	(15,625)
Gross balance at March 31, 2022	$	132,567
Less: unamortized transaction costs	(120)
Net balance at March 31, 2022	$	132,447

Gross balance at December 31, 2020	$	174,264
Interest expense recognized, including transaction cost amortization	7,932
Redemption of Series A preferred shares	(15,625)
Gross balance at March 31, 2021	$	166,571
Less: unamortized transaction costs	(162)
Net balance at March 31, 2021	$	166,409

RPI Series B Preferred Shares

On August 7, 2020, the Company entered into the RPI Series B Preferred Share Agreement, pursuant to which RPI agreed to invest in the Company through the purchase of up to 3,992 Series B Preferred Shares at a price of $50,100 per share. The shares will be issued in quarterly increments from March 31, 2021 to December 31, 2024. Upon issuance of the Series B Preferred Shares, they qualify as mandatorily redeemable instruments and are classified as a mandatorily redeemable preferred shares liability on the condensed consolidated balance sheet. The Company measures the liability at fair value, and subsequently accretes the carrying value to the redemption value through interest expense using the effective interest rate method. The effective interest rate under the Series B Preferred Share Agreement was determined to be approximately 8.7% as of March 31, 2022. The Company recognized $1,454 in interest expense for the three months ended March 31, 2022 and no interest expense for the three months ended March 31, 2021. The Company had 1,697 and 1,406 Series B preferred shares issued and outstanding, as of March 31, 2022 and December 31, 2021, respectively.

The following table shows the activity within the Series B preferred share liability for the three months ended March 31, 2022 and 2021, respectively:


	Carrying Value
Balance at December 31, 2021	$	76,627
Interest expense recognized	1,454
Issuance of Series B preferred shares at fair value	14,966
Balance at March 31, 2022	$	93,047

Balance at December 31, 2020	$	—

Issuance of Series B preferred shares at fair value	18,210
Balance at March 31, 2021	$	18,210