On September 29, 2021, the Company entered into a Revenue Interest Agreement with certain entities managed by HealthCare Royalty Management, LLC (“HCR”), pursuant to which the Company sold to HCR the right to receive certain royalty payments from the Company for a purchase price of up to $125.0 million. The Company evaluated the terms of the Revenue Interest Agreement and concluded that the features of the investment amount were similar to those of a debt instrument. The Company received gross proceeds of $50.0 million from HCR at an initial funding on October 19, 2021 (the “Initial Investment Amount”). As such, the Company accounted for this transaction as long-term debt as of December 31, 2021. The Company was entitled to receive an additional $50.0 million upon FDA approval of tebipenem HBr on or before December 31, 2022 (the “Second Investment Amount”), and an additional $25.0 million subject to the mutual agreement of the Company and HCR and if the Company meets certain minimum tebipenem HBr product sales thresholds in the United States within 12 months from commercial launch (the “Third Investment Amount,” and together with the Initial Investment Amount and the Second Investment Amount, collectively, the “Investment Amount”).

On June 7, 2022, the Company entered into a Revenue Interest Termination Agreement (the “Termination Agreement”) with HCR and HCR Collateral Management, LLC, as collateral agent for HCR under the Revenue Interest Agreement, pursuant to which the parties mutually terminated the Revenue Interest Agreement and Security Agreement between the parties (together, the HCR Agreements”), and certain other related ancillary agreements, arrangements or understandings under or contemplated by the HCR Agreements. The Company was released from all of its obligations and the rights to any future revenues and collateral reverted back to the Company in return for a cash payment of $54.5 million and a potential additional cash amount contingent upon the occurrence of a change of control event.

If a change of control event occurs on or prior to December 31, 2022, then the Company will be obligated to pay to HCR an additional amount within 15 days following the consummation of such change of control transaction, calculated based on the fully-diluted equity value of the Company. If the change of control value is less than $100 million, the change of control payment would be $4 million, if $100 million to $200 million, the change of control payment would be $4 million plus 6% of the change of control value in excess of $100 million and if above $200 million, the change of control payment would be $10 million plus 3% of the change of control value in excess of $200 million. The change of control payment is not cumulative, such that only the highest applicable change of control value shall apply in calculating the change of control payment.

The rights to this contingent payment expire on December 31, 2022. The contingent payment meets the accounting definition of a derivative under ASC 815 and therefore a liability of $0.1 million is recorded on the Company’s condensed consolidated balance sheet as of June 30, 2022 (see Note 3). The Company recognized a loss on the extinguishment of $3.6 million, as reported on the associated condensed consolidated statement of operations and comprehensive loss.

The following table presents the changes in the liability related to the sale of future royalties under the Revenue Interest Agreement with HCR as of June 30, 2022 (in thousands):



Liability related to sale of future royalties, as of December 31, 2021	$	48,414
Repayment of liability		(54,485	)
Loss on extinguishment of liability		3,581
Establish change of control derivative liability		(115	)
Interest expense recognized		2,605
Liability related to sale of future royalties, as of June 30, 2022	$	—