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Term Notes Payable
 6 Months Ended
Jun. 30, 2024
Term Notes Payable  
Term Notes Payable

10. Term Notes Payable

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2022 Term Loan

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On March 22, 2022, in connection with the closing of the BDSI Acquisition, the Company entered into an Amended and Restated Loan Agreement by and among the Company, and BioPharma Credit PLC, as collateral agent and lender, and BioPharma Credit Investments V (Master) LP, as lender (collectively “Pharmakon”), as amended (the “2022 Loan Agreement”). The 2022 Loan Agreement provided for a $650,000 secured term loan (the “2022 Term Loan”), the proceeds of which were used to repay the Company’s existing term notes and fund a portion of the consideration to be paid to complete the BDSI Acquisition. The 2022 Loan Agreement was accounted for as a debt modification and transaction fees of $173 were expensed. In connection with the 2022 Loan Agreement, the Company paid loan commitment and other fees to the lender of $19,818, which together with preexisting debt issuance costs and note discounts of $2,049 were amortized over the term of the loan using the effective interest rate. On July 28, 2024, in connection with the acquisition of Ironshore Therapeutics Inc. (“Ironshore”), the Company amended and restated the 2022 Term Loan. Refer to Note 16, Subsequent Events, for more information.

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The 2022 Term Loan would have matured on the 48-month anniversary of the closing of the BDSI Acquisition and was guaranteed by the Company’s material domestic subsidiaries. The 2022 Term Loan was also secured by substantially all of the assets of the Company and its material domestic subsidiaries. Prior to the cessation of the London Interbank Offered Rate (“LIBOR”) on June 30, 2023, the 2022 Term Loan bore interest at a rate based on LIBOR (subject to a LIBOR floor of 1.20%), plus a margin of 7.5% per annum. On June 23, 2023, the Company entered into an amendment to the 2022 Loan Agreement to adjust the interest terms of the 2022 Term Loan to transition from LIBOR to Secured Overnight Financing Rate (“SOFR”) in anticipation of the cessation of LIBOR. Effective July 1, 2023, the 2022 Term Loan bore interest at a rate based on SOFR plus a spread adjustment of 0.26% (subject to a floor of 1.20%), plus a margin of 7.5% per annum. As of June 30, 2024, the contractual interest rate was 13.1%. The Company paid $100,000 in principal payments under the 2022 Term Loan during the first year and the remaining $550,000 balance was required to be paid in equal quarterly installments over the remaining three years.

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The 2022 Loan Agreement permitted voluntary prepayment at any time, subject to a prepayment premium. The prepayment premium was equal to 2.00% of the principal amount being prepaid prior to the second-year anniversary of the closing date, or 1.00% of the principal amount being prepaid on or after the second-year anniversary of the closing date. The 2022 Loan Agreement also included a make-whole premium in the event of a voluntary prepayment, a prepayment due to a change in control or acceleration following an Event of Default (as defined in the 2022 Loan Agreement) on or prior to the second-year anniversary of the closing date, in each case in an amount equal to foregone interest from the date of prepayment through the second-year anniversary of the closing date. A change of control also triggered a mandatory prepayment of the 2022 Term Loan.

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The 2022 Loan Agreement contained certain covenants and obligations of the parties, including, without limitation, covenants that limited the Company’s ability to incur additional indebtedness or liens, make acquisitions or other investments or dispose of assets outside the ordinary course of business. Failure to comply with these covenants would have constituted an Event of Default under the 2022 Loan Agreement, notwithstanding the Company’s ability to meet its debt service obligations. The 2022 Loan Agreement also included various customary remedies for the lenders following an Event of Default, including the acceleration of repayment of outstanding amounts under the 2022 Loan Agreement and execution upon the collateral securing obligations under the 2022 Loan Agreement.

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The following table presents the total interest expense recognized related to the 2022 Term Loan during the three and six months ended June 30, 2024 and 2023.

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Three Months Ended June 30,

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Six Months Ended June 30,

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2024

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2023

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2024

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2023

Contractual interest expense

$

12,104

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$

17,688

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$

25,755

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$

35,343

Amortization of debt issuance costs

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1,318

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1,963

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2,798

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3,987

Total interest expense

$

13,422

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$

19,651

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$

28,553

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$

39,330

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As of June 30, 2024, the effective interest rate on the 2022 Term Loan was 14.6%.

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As of June 30, 2024, principal repayments under the 2022 Term Loan were as follows:

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Years ended December 31,

Principal Payments

2024

$

91,666

2025

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183,333

2026

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45,834

Total before unamortized discount and issuance costs

$

320,833

Less: unamortized discount and issuance costs

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(4,655)

Term notes carrying value

$

316,178

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