Loan and Security Agreement

6 Months Ended

Jun. 30, 2023

Loan and Security Agreement

Loan and Security Agreement

5. Loan and Security Agreement

In November 2019, the Company’s wholly owned subsidiary, Xilio Development, Inc. (“Borrower”), entered into a loan and security agreement (as amended and restated in May 2023, the “Loan Agreement”) with Pacific Western Bank (“PacWest”), with the Company as a guarantor. Under the Loan Agreement, in November 2019, the Borrower borrowed $10.0 million under a term loan. Interest on amounts outstanding under the Loan Agreement accrues 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, 2023, the interest rate on the term loan was 8.50%. The Borrower was required to make interest-only payments on any outstanding balances through December 31, 2022. The Borrower commenced making equal monthly payments of principal plus interest in January 2023, and it will be required to make such payments until the term loan matures on June 30, 2024.

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 Borrower granted PacWest a first priority security interest on substantially all of the Borrower’s assets, excluding intellectual property, subject to certain exceptions.

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, 2023, the Company and Borrower were in compliance with all covenants under the Loan Agreement.

The Borrower has the following minimum aggregate future loan principal payments under the Loan Agreement as of June 30, 2023:

	Minimum Loan
	Payments
2023 (remaining six months)	$	3,889
2024		3,333
Total future principal payments		7,222
Less: unamortized discount		(77)
Total note payable	$	7,145

The Company recognized $0.4 million and $0.3 million of interest expense related to the Loan Agreement for the six months ended June 30, 2023 and 2022, respectively, which is reflected in other income (expense), net on the condensed consolidated statements of operations and comprehensive loss.