Mandatorily Redeemable Preferred Shares, net

6 Months Ended

Jun. 30, 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 to RPI at a price of $50,100 per preferred share pursuant to the RPI Series A 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 a lump sum redemption of the shares in certain circumstances, such as in the event of a Change of Control, as defined in the Company's memorandum and article of association. Upon exercise of the put option by the holders, 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.

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 RPI Series A Preferred Share Agreement, including transaction costs, was determined to be approximately 20% as of June 30, 2022. The Company recognized $6,112 and $7,677 in interest expense for the three months ended June 30, 2022 and 2021, respectively. The company recognized $12,575 and $15,620 in interest expense for the six months ended June 30, 2022 and 2021, respectively. The Company had 1,559 and 1,871 Series A preferred shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

The following table shows the activity within the Series A preferred share liability for the six months ended June 30, 2022 and 2021, respectively:


	Carrying Value
Gross balance at December 31, 2021	$	141,740
Interest expense recognized, excluding transaction cost amortization	12,553
Redemption of Series A preferred shares	(31,250)
Gross balance at June 30, 2022	$	123,043
Less: unamortized transaction costs	(109)
Net balance at June 30, 2022	$	122,934

Gross balance at December 31, 2020	$	174,264
Interest expense recognized, including transaction cost amortization	15,599
Redemption of Series A preferred shares	(31,250)
Gross balance at June 30, 2021	$	158,613
Less: unamortized transaction costs	(152)
Net balance at June 30, 2021	$	158,461

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 initially 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 RPI Series B Preferred Share Agreement was determined to be approximately 7% as of June 30, 2022. The Company recognized $1,965 and $3,419 in interest expense for the three and six months ended June 30, 2022, respectively,

and $365 interest expense for the three and six months ended June 30, 2021. The Company had 1,988 and 1,406 Series B preferred shares issued and outstanding, as of June 30, 2022 and December 31, 2021, respectively.

The following table shows the activity within the Series B preferred share liability for the six months ended June 30, 2022 and 2021, respectively:


	Carrying Value
Balance at December 31, 2021	$	76,627
Interest expense recognized	3,419
Issuance of Series B preferred shares at fair value	39,733
Balance at June 30, 2022	$	119,779

Balance at December 31, 2020	$	—
Interest expense recognized	365
Issuance of Series B preferred shares at fair value	36,765
Balance at June 30, 2021	$	37,130

Pfizer Merger Agreement

On May 9, 2022, the Company, Pfizer and Merger Sub, entered into the Merger Agreement, see Note 1 for details. Pursuant to the terms set forth in the Merger Agreement, the Company shall (i) issue the remaining unissued Series B Preferred Shares pursuant to the Put Closing (as defined in the RPI Series B Preferred Share Agreement) and (ii) cause each Series A Preferred Shares and Series B Preferred Shares that are issued and outstanding to be redeemed by the Company. At the Closing (as defined in the Merger Agreement), Pfizer shall pay to the holders of Company's Series A Preferred Shares and Series B Preferred Shares, the redemption amount in immediately available funds. In connection with the early redemption of the Series A Preferred Shares and Series B Preferred Shares pursuant to the Merger Agreement, the Company recorded a derivative liability, see Note 4 for details.