Loan and Security Agreement

6 Months Ended

Jun. 30, 2022

Loan and Security Agreement

Loan and Security Agreement

6. Loan and Security Agreement

In November 2019, the Company entered into a loan and security agreement with Pacific Western Bank (“PacWest”), as amended (the “Loan Agreement”), pursuant to which the Company borrowed $10.0 million under a term loan and has the ability to request one or more additional term loans in an aggregate principal amount of $10.0 million prior to December 31, 2022. Interest on amounts outstanding under the Loan Agreement accrue at a variable annual rate equal to the greater of (i) the prime rate plus 0.25% or (ii) 4.75%. As of June 30, 2022 the interest rate on the term loan is 5.0%. The Company is required to make interest-only payments on any outstanding balances through December 31, 2022. Subsequent to the interest-only period, the Company will be required to make equal monthly payments of principal plus interest until the term loan matures on June 30, 2024. In addition, under the Loan Agreement, the Company paid a one-time success fee of $0.8 million to PacWest in October 2021 upon the closing of the IPO. The Company is also obligated to pay PacWest a fee of 1.0% of the aggregate principal amounts then outstanding if any term loans are repaid prior to September 17, 2022.

The Loan Agreement contains customary representations, warranties and covenants and also includes customary terms covering events of default, including payment defaults, breaches of covenants, a change of control provision and occurrence of a material adverse effect. As security for its obligations under the Loan Agreement, the Company granted PacWest a first priority security interest on substantially all of the Company’s assets (other than intellectual property), subject to certain exceptions.

The Company has determined that the risk of subjective acceleration under the material adverse effect clause is not probable and therefore has classified the long-term portion of the outstanding principal in non-current liabilities. Upon the occurrence and continuation of an event of default, a default interest rate of an additional 5% per annum may be applied to the outstanding loan balance, and the administrative agent, collateral agent, and lender may declare all outstanding obligations immediately due and payable and exercise all of their rights and remedies as set forth in the Loan Agreement and under applicable law. As of June 30, 2022, the Company was in compliance with all covenants under the Loan Agreement.

The Company has the following minimum aggregate future loan payments under the Loan Agreement as of June 30, 2022:

	Minimum Loan
	Payments
2022	$	—
2023		6,667
2024		3,333
Total future principal payments		10,000
Less: unamortized discount		(273)
Total notes payable	$	9,727

The Company recognized $0.3 million of interest expense related to the Loan Agreement during each of the six months ended June 30, 2022 and 2021, respectively, which is reflected in other expense, net on the condensed consolidated statements of operations and comprehensive loss.