13. LONG-TERM DEBT AND COMMITMENTS

The Company’s indebtedness consists of the following (in thousands):


	Balance as of
	March 31,		December 31,
	2020		2019
Convertible Notes	$	181,426	$	181,426
Unamortized discount and debt issuance costs		396		1,580
Convertible Notes, net		181,822		183,006

2024 Notes		61,351		61,351
Unamortized premium and debt issuance costs, net		(2,441)		(2,630)
2024 Notes, net		58,910		58,721

Total debt		240,732		241,727
Less current portion		181,822		183,006
Total long-term debt	$	58,910	$	58,721

Convertible Notes Due 2020

In May 2013, the Company closed offerings of $250.0 million in 4.50% Convertible Senior Notes due May 1, 2020. The Convertible Notes are governed by an indenture, dated May 2013 between the Company and Deutsche Bank National Trust Company, as trustee. Total net proceeds from the Convertible Notes were approximately $241.8 million. The Convertible Notes are convertible at a conversion rate of approximately $148.58 per share at the option of the holders. Subject to certain limitations, the Company will settle conversions of the Convertible Notes by paying or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. Interest payments are made quarterly. In June 2018, the Company repurchased $60.0 million of face value of the Convertible Notes for $51.0 million in cash plus accrued but unpaid interest using funds received from the issuance of the Company’s 2024 Notes (as defined below.) The gain was accounted for as a debt modification with the gain applied to the modified debt. In October 2018, the Company repurchased $8.6 million of face value of the Convertible Notes for $7.1 million in cash plus accrued but unpaid interest. The gain on this repurchase of $1.4 million was recorded on the statement of operations as a gain on extinguishment of debt and recorded on the income statement.

On April 29, 2020, the Company entered into an agreement with IEH Biopharma, which holds a principal amount of approximately $170.2 million of the Company’s Convertible Notes. Under the terms of the agreement, the Company paid IEH Biopharma $3.8 million in accrued and unpaid interest on the Convertible Notes and IEH Biopharma granted the Company a 30-day grace period (if not terminated sooner pursuant to the terms of the agreement), beginning May 1, for payment of the principal amount of the Convertible Notes during which the two parties will work exclusively to attempt to restructure the outstanding principal amount of the Convertible Notes. As part of the agreement, the Company paid $7.5 million to settle the remaining $11.3 million in principal and $253,000 in accrued and unpaid interest held by other holders. See Note 17.

2024 Notes

In June 2018, the Company entered into an indenture (the “Indenture”) with U.S. Bank National Association as trustee and collateral agent regarding the purchase agreement entered into with affiliates of Athyrium Capital Management (collectively, the “Purchasers”) for the issuance and sale of (i) $110.0 million of 10.375% senior secured notes due 2024 (the “2024 Notes”), (ii) up to an additional $10.0 million of 10.375% 2024 Notes to be issued subsequently at the Company’s option within 12 months of the issue date of the 2024 Notes, subject to certain conditions, and (iii) a warrant for 330,000 shares issued concurrently with the issuance of the 2024 Notes. The 2024 Notes were issued at a purchase price equal to 99% of the principal amount and contain customary representations, warranties, covenants, conditions and indemnities.

The Company used the net proceeds from the issuance of the 2024 Notes to pay (i) certain fees, costs and expenses relating to the issuance and sale of the 2024 Notes, (ii) to finance a portion of the acquisition of PANCREAZE and (iii) to repurchase $60.0 million of the Company’s outstanding Convertible Notes from the Purchasers or their affiliates for a purchase price of $51.0 million (plus accrued but unpaid interest to the repurchase date). The fair value of the warrant issued was estimated using the Black-Scholes option pricing model, using a term of 6.0 years, an estimated volatility of 62.7%, a risk-free interest rate of 2.83% and an expected dividend yield of 0%. The Indenture has an effective interest rate of 11.3% and includes customary covenants and events of default, including covenants that, among other things, restrict the incurrence of future indebtedness, the granting of liens, the making of investments, distributions or dividends, and the Company’s ability to merge, consolidate or sell assets, in each case subject to certain exceptions. In addition, the Indenture includes certain financial maintenance covenants related to minimum cash balances and minimum quarterly net revenues related to PANCREAZE.

As of June 30, 2019, the Company was not in compliance with a covenant in the Indenture related to PANCREAZE net revenues. The Company subsequently received a waiver from the consenting noteholders with respect to any potential event of default or default that may have resulted from such covenant non-compliance. In September 2019, the Company entered into a second supplemental indenture (the “Second Supplemental Indenture”) which amended the Indenture to (i) revise the compliance dates for minimum quarterly PANCREAZE net sales, (ii) reduce the minimum unrestricted cash equivalents, and (iii) effect the pledge of material intellectual property related to Qsymia® and PANCREAZE®. The Second Supplemental Indenture was entered into in satisfaction of the conditions set forth in the waiver of default obtained in connection with the Indenture. As of March 31, 2020, the Company was in compliance with the covenants in the Indenture as modified by the Second Supplemental Indenture.

In September 2019, the Company repurchased $48.6 million aggregate principal amount of the 2024 Notes plus prepayment premiums of an aggregate of $6.4 million. The prepayment premiums were recorded as interest expense. There was no gain or loss on the transaction.

Future estimated payments, including interest, on all of the Company’s indebtedness as of March 31, 2020 are as follows (in thousands):


2020 (rest of year)	$	190,736
2021		20,152
2022		23,034
2023		21,076
2024		9,822
	$	264,820

Cardiovascular Outcomes Trial

As a condition of FDA granting approval to commercialize Qsymia in the U.S., the Company agreed to complete certain post-marketing requirements. One requirement was to perform a cardiovascular outcomes trial (“CVOT”) on Qsymia. The cost of a CVOT is estimated to be between $180 million and $220 million incurred over a period of approximately five years. The Company is working with FDA to determine a pathway to provide FDA with data to support the safety of Qsymia in a more cost-effective manner. To date, the Company has not incurred expenses related to the CVOT.