XML 21 R14.htm IDEA: XBRL DOCUMENT
v3.24.2.u1

Term Loan Facility | 6 Months Ended
--- | ---
Jun. 30, 2024
Debt Disclosure [Abstract] |
Term Loan Facility | 6. Term Loan Facility In January 2023, the Company entered into a Loan and Security Agreement (“the Loan Agreement”) with the lender parties thereto (the “Lenders”), K2 HealthVentures LLC as administrative agent and Ankura Trust Company, LLC as collateral agent. The Loan Agreement provides for up to $100.0 million in aggregate principal in term loans, consisting of an initial tranche of $25.0 million that was funded at closing, second and third tranches of $15.0 million and $10.0 million, respectively, that may be funded upon the achievement of certain time-based, clinical and regulatory milestones, and a fourth tranche of up to $50.0 million that may be funded upon discretionary approval by the Lenders. As of June 30, 2024, the second and third tranches expired undrawn and the fourth tranche remains available at the sole discretion of the Lenders. Borrowings under the Loan Agreement are secured by substantially all of the assets of the Company, excluding the Company’s intellectual property. The Loan Agreement contains customary representations and warranties, restricts certain activities and includes customary events of default, including payment default, breach of covenants, change of control, and material adverse effects. In addition, starting January 1, 2024, the Company is required to maintain minimum unrestricted cash and cash equivalents equal to 5.0 times the average change in cash and cash equivalents measured over the trailing three-month period. As of June 30, 2024, the Company was in compliance with all covenants under the Loan Agreement. Borrowings under the Loan Agreement mature on January 1, 2027 and provide for interest-only payments until February 1, 2025. Consecutive equal payments of principal and interest are due once the interest-only period has elapsed. Borrowings under the Loan Agreement bear interest equal to the greater of (i) 8.45% and (ii) the sum of (a) the Prime Rate as reported in The Wall Street Journal plus (b) 2.25%. The stated interest rate on the term loan was 9.75% at inception and 10.75% as of June 30, 2024. In addition, a final payment fee of 5.95% of the principal amount of the term loans is due upon the earlier of prepayment or maturity of the term loans. The Company has the option to prepay the entire outstanding balance of borrowings under the Loan Agreement, subject to a prepayment fee ranging from 1.0% to 3.0% depending on the timing of such prepayment. A commitment fee equal to 0.6% of the principal amount of the fourth tranche is also payable if drawn. At any time prior to full repayment of outstanding borrowings under the Loan Agreement, the Lenders may elect to convert up to an aggregate of $7.5 million of the principal amount of outstanding borrowings into shares of the Company's common stock at a conversion price of $12.6943 per share. The embedded conversion option qualifies for a scope exception from derivative accounting because it is both indexed to the Company’s own stock and met the conditions for equity classification. Total debt issuance costs related to the term loan facility of $0.8 million, which includes the fair value of warrants issued in connection with the facility, were recorded as debt discount. The debt discount, together with the final payment fee, are recognized as interest expense using the effective interest method over the term of the loan facility. The expected repayments of principal amount due on borrowings as of June 30, 2024 are as follows (in thousands):
2024 (remaining six months) |  | $ | — |
2025 |  |  | 10,774 |
2026 |  |  | 13,036 |
2027 |  |  | 1,190 |
Total principal outstanding |  |  | 25,000 |
Plus accumulated accretion of final payment fee |  |  | 602 |
Less unamortized debt discount |  |  | (477 | )
Total net carrying value |  |  | 25,125 |
Term loan, current |  |  | (4,770 | )
Term loan, noncurrent, net |  | $ | 20,355 |
In connection with the Loan Agreement, the Company issued the Lenders a warrant to purchase up to an aggregate of 204,815 shares of the Company’s common stock at an exercise price of $9.7649 per share (the “warrant shares”). The warrant shares become exercisable upon the funding of each tranche and have a 10-year term. In connection with the first tranche that was funded at closing, 51,204 of the warrant shares became exercisable. The warrant shares cannot be settled for cash and include a cashless exercise feature allowing the holder to receive shares net of shares withheld in lieu of the exercise price. The warrant shares also provide for automatic cashless exercise under certain specific conditions and settlement is permitted in unregistered shares. The 51,204 warrant shares met the requirements for equity classification. T he Company determined the fair value of the 51,204 warrant shares issued using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate of 3.9%, no dividends, expected volatility of 93.8% and expected term of 10.0 years. Of the remaining 153,611 warrant shares (the “contingent warrants”), 102,407 warrant shares associated with the fourth tranche remain outstanding and 51,204 warrant shares associated with the second and third tranches were forfeited as of June 30, 2024. The contingent warrants did not meet the derivative scope exception or equity classification criteria and were accounted for as a derivative liability. The initial fair value and the fair value as of June 30, 2024 of the contingent warrants was insignificant. The contingent warrants derivative liability is remeasured each reporting period until settled or extinguished with subsequent changes in fair value recorded as interest expense in the condensed consolidated statements of operations and comprehensive loss. The initial fair value of the contingent warrants derivative liability was determined using a probability weighted Black-Scholes option pricing model based on the same Black-Scholes input assumptions described above.

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 470 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//470/tableOfContent + Details
Name: | us-gaap_LongTermDebtTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration