Notes Payable

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Notes Payable

11. Notes payable

In May 2019, the Company entered into a senior term facilities agreement, which was amended in April 2020 (the “Original Credit Facility”) with MidCap Financial (Ireland) Limited (“MidCap Financial”), as agent, and additional lenders from time to time (together with MidCap Financial, the “Lenders”), to borrow up to $75.0 million in term loans.

In May 2021, the Company amended and restated the Original Credit Facility (the “Amended Credit Facility”). Under the Amended Credit Facility, the Lenders agreed to make term loans available to the Company in the aggregate amount of $100.0 million, including increasing the principal on the initial term loan to $33.0 million, from $25.0 million. To date, the Company has borrowed $33.0 million under the amended initial term loan. The remaining $67.0 million under the Amended Credit Facility may be drawn down in the form of a second and third term loan, the second term loan being a $33.0 million term loan available no earlier than July 1, 2022 and no later than July 1, 2023 upon certain regulatory approvals and evidence of the Company having $100 million in cash and cash equivalent investments; and the third term loan being a $34.0 million term loan available no earlier than July 1, 2023 and no later than July 1, 2024 upon evidence of the Company having $100 million in cash and cash equivalent investments and attaining a pre-specified trailing 12-month revenue target.

Each term loan under the Amended Credit Facility bears interest at an annual rate equal to 5.95% plus LIBOR. The Company is required to make interest-only payments on the term loan for 18 months following the date of the Amended Credit Facility, unless the Company is eligible for the second tranche, in which case the Company may elect to make interest-only payments for 30 months following the date of the Amended Credit Facility. The term loans under to the Amended Credit Facility begin amortizing on either the 18-month or the 30-month anniversary of the Amended Credit Facility (as applicable), with equal monthly payments of principal plus interest to be made by the Company to the Lenders in consecutive monthly installments until the loan maturity date. In addition, a final payment of 3.5% is due on the loan maturity date. The Company is accruing the final payment amount of $1.2 million associated with the first term loan of the Amended Credit Facility, to outstanding debt by charges to interest expense using the effective-interest method from the date of issuance through the loan maturity date.

The Amended Credit Facility includes affirmative and negative covenants. The affirmative covenants include, among others, covenants requiring the Company to maintain their legal existence and governmental approvals, deliver certain financial reports, maintain insurance coverage, maintain property, pay taxes, satisfy certain requirements regarding accounts and comply with laws and regulations. The negative covenants include, among others, restrictions on the Company transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, amending material agreements and organizational documents, selling assets, changing the nature of the business and undergoing a change in control, in some cases subject to certain exceptions. The Company is also subject to an ongoing minimum cash financial covenant in which the Company must maintain unrestricted cash in an amount not less than $20.0 million following the utilization of the second term loan and not less than $35.0 million following the utilization of the third term loan.

In January 2023, the Company again amended and restated the credit facility to change from LIBOR to SOFR. The newly amended facility bears a variable interest rate of 5.95% above SOFR plus 0.10% per annum, plus a final payment equal to 3.5% of the principal borrowed under the Amended Credit Facility.

Notes payable consisted of the following (in thousands):

	December 31,
	2022			2021
Notes payable, net of issuance costs	$	31,970		$	32,669
Less: current portion		(9,429	)		(786	)
Notes payable, net of current portion		22,541			31,883
Accretion related to final payment		450			203
Notes payable, long term	$	22,991		$	32,086

As of December 31, 2022, the future principal payments and final payment that are due are as follows (in thousands):

	Aggregate Minimum Payments
2023	$	9,429
2024		9,429
2025		9,429
2026		5,084
Total		33,371
Less current portion		(9,429	)
Less unamortized portion of final payment		(705	)
Less unamortized debt issuance costs		(246	)
Notes payable, long term	$	22,991

During the years ended December 31, 2022 and 2021, the Company recognized $3.0 million and $2.5 million of interest expense related to the term loan, respectively. The effective annual interest rate as of December 31, 2022 and 2021, on the outstanding debt under the Term Loan was approximately 9.2% and 8.4%, respectively.